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| Sunday, 23 February 2003 |
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NDB records strong performance in 2002 The National Development Bank (NDB) recorded a post-tax profit of Rs 836 million for the year ended December 2002 compared to Rs 613 million during the same period of 2001, an increase of 36 per cent. The bank's financial results for the year ended December 2002 showed a strong performance during a critical transitional period of the group. Group profits also grew through good performance by group companies including a return to profitability of Mercantile Leasing Ltd. Profit after tax for the group was Rs 1,043 million compared with Rs 559 million for the previous year, a growth of 87 per cent. Compounded annual growth rates of profit after tax for the bank and the group over the last five years amounted to 2.5 and 2.6 per cent respectively. The balance sheet was strengthened to meet the twin challenges of 2003, those arising from the expected post-conflict economic revival and reconstruction activities in Sri Lanka which will provide opportunities for its core project and SME lending businesses and the crucial widening of its range of financial products for which regulatory permission has been sought, a news release from the bank said. Net interest income increased from Rs 1,174 million last year to Rs 1,356 million for 2002. The bank's other income consisting of fee income, group dividends, net operating, lease hire and equity income was Rs 668 million compared with Rs 444 million for the previous year. The bank maintained zero growth on overhead expenses despite a strong and continuing investment in employee training. The post-tax figure also reflects the benefit from the reduction in tax rates for 2002. While there were signs of economic recovery in 2002, it was not sufficiently broadbased and did not provide the required impetus for long-term investment; thus demand for project loans remained weak. Credit lines from multilateral agencies which supported the project lending business in Sri Lanka in the past have disappeared, making single product development finance institutions (DFI) unsustainable for the future. Globally DFIs have diversified their product range or faced problems of liquidity and profitability. Therefore, NDB while keeping project finance and SME lending as core businesses, will need to be supplemented by commercial banking products to be sustainable. While NDB is working towards merging its business with the commercial banking business of NDB Bank Ltd, the bank is also taking all measures to remain a profitable, strongly provisioned and capitalised bank, well positioned to grow its business when the proposed consolidation occurs. |
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