National Development Bank PLC continued to demonstrate resilience to external shocks as reflected in financial statements released to the Colombo Stock Exchange for the six months ended June 30, 2021.
NDB recorded a total operating income of Rs. 15.4 bn which grew by 19% over six months ended June 2020 (YoY). NII, the majority contributor in operating income (67%), grew by 17% to Rs. 10 bn. The CASA base also improved by 54% YoY (Rs. 48 bn). Resultant annualised net interest margin (NIM) was 3.23% (H1 2020 – 3.25%).
Net fee and commission income grew by an impressive 48% to Rs. 2.6 bn. Impairment charges for loans and other losses for H1 2021 was Rs. 4.2 bn, an increase of 31% YoY. The regulatory gross non-performing loan [NPL] ratio for H1 2021 was 5.63% (2020: 5.35%) reflecting the wider industry NPL behaviour. The net NPL ratio for the quarter was 3.37% (2020:3.23%).
Costs continued to be well managed, benefiting from the Bank’s organisation-wide Operational Efficiency and Effectiveness improvement program (OEE) and strong digital drive. Total operating expenses for H1 2021 was Rs. 5.1 bn. The gradual increase in deployment of Robotic Process Automations and workflow solutions in internal processes are delivering their investment dividends, with the increase in controllable costs managed at reasonable levels. NDB NEOS digitised platforms undergo continuous upgrades, propelling the uptake of these digital channels over physical banking for our customers. The resultant cost to income ratio for the period was 33%, remaining at the low 30% range.
Operating profit before all taxes for the period was Rs. 6.1 bn, up by 21% YoY. Total taxes for the period was Rs. 2.2bn, comprising VAT on financial services – which recorded an increase of 16% due to increase in business volumes, and income tax - which reduced by 4% amidst an increase in profits due to the income tax rate reducing to 24%(effective from the prior year) from 28% in the prior year. The effective tax rate for H1 2021 was 36%. Accordingly, post-tax profitability enhanced to Rs. 3.9 bn, up by 32% whilst profit attributable to shareholders increased to LKR4.1 bn, up by a notable 73%. NDB Group’s capital market cluster continued to make valid contribution to the overall Group profitability, benefitted by greater opportunities available in the Sri Lankan capital markets.
Total assets for H1 2021 was Rs. 664 bn, up by 6% over 2020. On YoY terms this was a growth of 18%. Loan book growth was broad-based, to Rs. 487 bn, a YTD growth of 10% and YoY growth of 14% (quantum of growth – Rs. 43.5 bn and Rs. 58.2 bn), with lending increasing to all segments.
On aspects of funding, the Bank’s deposits base crossed the Rs. 500 bn mark for the first time with deposits closing in at Rs. 515 bn. This was a YTD growth of 5% and YoY growth of 21%, which translated to quantum of Rs. 25.0 bn and Rs. 87.7 bn respectively. CASA deposits grew by 11% YTD (Rs. 13 bn) to Rs. 136 bn.
The period under review booked a total capital infusion of Rs. 9.46 bn.