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| Sunday, 23 November 2003 |
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NDB posts strong results The NDB Group reported strong results for the nine months ended September 30, 2003 with profit after tax and minority interests increasing by 33 per cent over the corresponding period last year to Rs 833 million. This translates to a return on equity of 15.4 per cent on an annualised basis. Capital adequacy (Tier 1 and 2) was 21 per cent, the bank said in a news release. Over the last few months, there has been increased demand for project lending, especially in the infrastructure development and hotel sectors, in which the group carries an encouraging pipeline of projects, and has the expertise to evaluate, structure and distribute deals. However, project lending, which is long term in nature, is highly sensitive to investor confidence in the economy, and necessarily involves long lead times between formulation of plans by investors and the disbursement of funds. The National Development Bank (NDB) remains committed to the Small and Medium Enterprises (SME) sector. Since inception, it has directly assisted around 4500 small scale entrepreneurs with total lending of around five billion rupees. It has also played an apex role in refinancing credit lines for Participating Credit Institutions (PCIs) including the recent Dasuna loan scheme, targeted at the Southern Province, and the Inland Fisheries Development Scheme. NDB also works as a PCI under the Asian Development Bank-funded Sahanya loan scheme, the Tea Development Project and the Second Perennial Crop Development Project. It operates another scheme with German Development Bank support to help the micro sector. The bank also operates a Technology Transfer Fund where a combination of a loan and a grant could be obtained by SMEs to upgrade their technology, train staff or purchase quality control or laboratory equipment. An aggregate of Rs 20.7 billion has to date been disbursed under these credit lines by way of refinancing with 33,000 projects assisted, creating over 200,000 employment opportunities. NDB is now formulating plans to expand its support to the SME sector, the release said. The bank has continued with its aggressive lending policies, which exceed Central Bank's minimum requirements. Provisioning for Non-Performing Loans (NPL) now amounts to 55 per cent. NPLs continue to decline in response to focused and consistent management action over a period of time, and amounted to Rs 3.1 billion as at September 30, 2003, compared with Rs 4.3 billion an year ago. Consequently, the open loan exposure ratio, which measures the capacity of the balance sheet to absorb potential losses, has reduced to a healthy 22 per cent from 40 per cent last year. Management has also focused on the rationalisation of subsidiaries to improve operational efficiencies and returns on capital and to integrate and synergise their activities with those of NDB. Thus, the stake in Eagle Insurance Co Ltd was increased to 66 per cent with the withdrawal of Zurich financial Services from Sri Lanka. Eagle sits comfortably with the bank's strong and well capitalised balance sheet. Through bancassurance, it is also an integral part of the bank's plans to cross-sell products and to become a dominant force in the financial services sector. The NDB Bank continues to perform well and works closely with NDB to broaden the group's product and service range. However, it is clear that both banks have no option but to merge if they are to progress. Every effort is being made to facilitate the regulatory process and to implement integration and expansion plans to the extent possible. |
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