NDB Bank profit shows steady growth in 1Q, boosted by exceptional capital gain

NDB group's profit before tax increased significantly from Rs. 399 million for the three months ended March 31, 2005 to Rs. 2,274 million for the three months ended March 31, 2006.

The profit attributable to shareholders was Rs. 1,555 million as compared with Rs. 227 million for the corresponding period. This exceptional increase was due to Capital Development and Investment Company (CDIC) making a capital gain on the sale of 58.44% of it holding in NDB Finance Lanka (Pte) Limited (the holding company of Eagle Insurance Co. Limited) shares to AVIVA International Holdings Limited on February 1, 2006.

This sale generated a profit of Rs. 1.64 billion to CDIC. Consequently, NDB Group through its holding of 75.6% in CDIC, made a profit of Rs. 1.24 billion during the first quarter. On February 2, 2006, the Bank purchased a 5% stake in Eagle Insurance Company Limited from James Finlay and Company (Colombo) Ltd. Consequently the Bank's effective holding in Eagle Insurance Company Limited is 32.42%.

NDB Finance Lanka (Pvt) Limited was accounted as a subsidiary company during last year and up to January 31, 2006 and as an associate company thereafter.

The core banking business continued to make steady progress during the period. The loan book of the bank increased by Rs. 2.5 billion mainly due to vigorous expansion in the commercial bank's activities.

The net interest income increased by 45% over the corresponding period last year.

The gross lending portfolio of the merged Bank increased from Rs. 34 billion to Rs. 37 billion, an increase of 8%.

The non performing loans improved from Rs. 1,591 million as at December 31, 2005 to Rs. 1,246 million as at March 31, 2006. The merged Bank's NPL ratio reducing from 4.2% as at year end to 3.3% as at March 31, 2006.