NDB records 8% YoY growth for H1 2019 | Sunday Observer

NDB records 8% YoY growth for H1 2019

National Development Bank PLC reported a pre-tax profit exceeding Rs. 5 bn for the first six month of 2019, an increase of 8% over the corresponding period, prior year. Post tax profitability of Rs. 2.22 bn was a drop of 15% over the comparative period, the Bank stated in a stock filing to the Colombo Stock Exchange last week.

Income sources performed exceptionally well during the first half of 2019 in the backdrop of reduced economic activity and challenging market conditions. Gross income grew by 22% to Rs. 28.9 bn, while total operating income recorded a 14% growth to Rs. 11.5 bn. Net interest income (NII) which contributed to 75% of total operating income grew by an impressive 27% to Rs. 8.7 bn, benefiting from a number of asset and liability management strategies deployed by the Bank. The Bank’s Net Interest Margin for the period under review was 3.36%.

Net fee and commission income grew by 22% to Rs. 1.8 bn. Net gains from trading, improved by 15% to Rs. 676 mn whilst net gains from financial investments doubled to Rs. 2.9 mn.

Other operating income on the other hand was a reduction of 89% down to Rs. 101 mn, predominantly due to the exchange losses.Total impairment charges for loans and other losses for the period under review was Rs. 1.9 bn. The Bank’s non-performing loan (NPL) ratio, which has been on an upward trend since end 2018 increased to 4.56%, reflective of the wider industry trajectory for NPLs, yet below the industry NPL ratio of 4.8%.

Operating expenses for the six months ended June 30, 2019 was Rs. 4.7 bn.

Total assets grew by 4% over the end December 2018 position to reach Rs. 490.2 bn. Within total assets, gross loans and advances to customers grew by 5% to Rs. 372 mn which translated to a growth of Rs. 19 bn.

On a YoY basis, deposits grew by 19%, which was an equivalent of Rs. 57.4 bn. In March 2019 the Bank issued 50 mn Basel III compliant, listed rated unsecured and subordinated debentures with a par value of Rs. 100 and a tenor of five years in March 2019, which was oversubscribed, and raised Rs. 5.561 bn to strengthen the Bank’s Tier II capital base. Capital augmentation plans are underway at the Bank, particularly to meet the escalated capital requirements, when the Bank crosses the Rs. 500 bn total asset base, which is currently defined as Domestic – Systemically Important Bank status. The annualised Return on Equity for the first six months of 2019 was 10.91% (2018: 17.41%), while the annualised Earnings Per Share was Rs. 17.52 (2018: Rs. 30.22). Pre-tax Return on Average Assets was 1.88%, down from 2.22% in 2018.

The Group Chief Executive Officer of NDB, Dimantha Seneviratne said that the Bank has performed well under trying circumstances where all industries, including the banking sector have faced many challenges in the present economic context.