NDB records Rs. 5.7 b PAT for FY2018 | Sunday Observer

NDB records Rs. 5.7 b PAT for FY2018

CEO Dimantha Seneviratne and Chairman Ananda W. Atukorala
CEO Dimantha Seneviratne and Chairman Ananda W. Atukorala

The National Development Bank (NDB) reported a Net Interest Income (NII) of Rs 14.8 billion last year. The total operating income for the year was Rs. 21.6 billion, a 33% growth, a media release stated.

The performance of NDB in 2018 is an affirmation of the Bank’s transition from a mid-sized player to a bank of a higher league, Group Chief Executive Officer of the National Development Bank (NDB), Dimantha Seneviratne has stated in the report.

Impairment charges for loans and other losses of the Bank increased by 163% to Rs 3.3 billion.

Operating expenses increasd by 16%, the highest component being Personnel expenses, which amounted to 53% of total costs. This was mainly driven by the increase in talent recruitment to support growing business and changes to staff remuneration.

The cost to income ratio (CIR) improved from 45.5% for 2017 to 39.4% in 2018. NDB recorded the highest level of profitability in its 40-years-history, from its ordinary course of business. Profit after taxes, including the newly introduced Debt Repayment Levy, was Rs. 5.7 billion - an impressive increase of 30% over the prior year. Profit attributable to shareholders, which includes profits from subsidiary companies, crossed Rs. 5 billion for the first time. NDB recorded 23% growth in Balance Sheet with a total asset base of Rs. 473 bn.

During 2018, NDB Bank secured a rupee facility equivalent to USD 35 million from the International Finance Corporation and USD 75 million arranged by Commerze Bank AG at competitive rates.

The non-performing loan ratio (NPL) denoting the quality of the loan portfolio increased to 2.85% from 1.83% in 2017. This increase in the NPL ratio reflects an industrywide trend, however well below the industry average of 3.4% in 2018. The Bank’s prudent risk management practices in credit assessments, proactive and focused monitoring of the portfolios and regionally driven remedial management have been instrumental in preserving the asset quality and minimizing potential loan losses.

Business expansion during 2018 was also supported by significant investments in digital and physical infrastructure for an enhanced customer experience. During 2018, NDB installed 27 Cash Recycle Machines and extended their “branchless banking services” – Bank2U across 71 branches as a part of the digital financial services strategy. In light of the deployment of digital banking avenues, the expansion of the physical branches was moderated to one new branch opened at Katugasthota, whilst 5 branches were relocated for better customer experience. Services to high net worth customers was further upgraded by opening three Privilege Banking Centres at strategic locations.

The Tier I capital ratio [minimum requirement – 7.875%] for the Bank and the Group stood at 9.2% and 10.4% respectively whilst the total capital ratio [minimum requirement – 11.875%] stood at 12.7% and 13.7% as at end 2018.

In response to this demand for additional capital, the Bank concluded a Rights Issue during the last quarter of 2018, resulting in Rs. 3.4 bn being raised as Tier I capital.

The impressive financial results led to enhanced investor ratios. Return on equity [ROE] at the Bank level was 17.78% [2017 – 16.27%], whilst the ROE of the NDB Group was 14.61% [2017 – 11.09%]. The Bank Earnings per Share improved to Rs. 30.92 from Rs. 24.52 in 2017. The net book value per share at the Group level was Rs. 185.63 whilst same at the Bank level was Rs. 166.94.