CORPORATE

NDB Group's profit grows 102%

NDB Group's profit attributable to shareholders for the first quarter of 2011 doubled over that of the same quarter of 2010 recording a growth of 102 percent.

The improved performance was supported by NDB Bank's strong and sustainable core banking profits and of the group companies. The Group has been able to sustain core banking profit growth and demonstrate a systematic increase in its performance as a financial services group.

With its presence in full fledged banking, capital markets and insurance, the Group positions itself as a unique knowledge hub. With a healthy and well structured balance sheet, and an affirmed rating of "AA (lka)" by Fitch Ratings, NDB provides its stakeholders, the much desired comfort for their investment and future growth potential.

NDB Group's Profit Before Tax for the quarter ended March 31 was Rs. 966 million, a growth of 23 percent over the corresponding period last year. NDB Bank's Profit before Tax for the quarter was Rs. 708 million, a growth of 8 percent over that of the first quarter of 2010.

The Core Banking Income of the Bank increased by 15 percent over the same period.

The Bank's Profit After Tax increased even more significantly by 65 percent, partly due to the reduced tax rates applicable from 2011.

The Bank's Balance Sheet as at March 31 grew by 17 percent over March 2010 from Rs 94.6 billion to Rs 110.3 billion.

This was mainly due to the significant growth in the gross lending portfolio by Rs 20.1 billion (35 percent) over the past twelve months.

This was supported by a growth of 21 percent in the deposit portfolio. This impressive growth in the bank's lending portfolio and deposit liabilities were well in line with industry growth rates.

Despite the significant growth in the loan portfolio in all the sectors, NDB Bank contained its Non Performing Loans (NPL) ratio to an all time low of 1.8 percent, one of the lowest in the industry, due to prudent underwriting policies and well-defined risk acceptance criteria.

This low level of delinquencies were achieved by analysing the customers' cash flows and matching their repayments to their business income cycles. The provision cover on NPLs was at 73 percent as at March 31, 2011 with an Open Loan Position of 3.29 percent, which signify minimum amount of stress on the Bank's equity, on account of unprovided delinquencies.

The Bank's Tier 1 Capital Adequacy Ratio of 11.18 percent and a Tier 1 and 2 ratio of 12.89 percent are well in excess of the regulatory minimum of 5 percent and 10 percent, providing ample capacity for the rapid expansion planned for the future.

HNB Group PAT up 74% in 1Q

HNB continued its growth momentum in the first quarter with core banking activities contributing to strong results.

The Bank posted a pre-tax profit of Rs. 1.7 billion up by 42 percent while post tax profits increased to Rs. 1.13 billion up by 74 percent over the corresponding period of 2010.

Managing Director/CEO of HNB PLC Rajendra Theagarajah said that the credit growth witnessed from the second half of 2010 continued in to 2011 driven by the conducive business environment.

This resulted in a growth of Rs. 12.8 billion in gross loans and advances over the first three months of the year to reach Rs. 222.3 billion as at end March.

The growth in loans reflected in a 7 percent growth in interest income from loans and advances withstanding re-pricing of assets.

Total deposits during the first quarter grew by Rs. 8.7 billion to Rs. 248.9 billion while maintaining the CASA at 51 percent.

The Bank reduced its interest expense by 9 percent over the last year backed by the low cost deposit base and prevailing low interest rates resulting in a growth of 10 percent in net interest income over the corresponding period.

Non-interest income also witnessed a 25 percent increase contributing to overall growth with foreign exchange income increasing by a commendable 51 percent despite relatively stable foreign exchange rates.

While Other income too improved by 19 percent mainly on account of commission income earned from trade related activities.

The operating income increased 13 percent mainly on account of the aggressive expansion drive of the Bank adding 20 customer centres to the network during the 12 months up to end March.

The provisions on account of bad and doubtful debts decreased by Rs.128 million.

This was primarily due to the direction issued by the Central Bank of Sri Lanka to gradually reduce the general provisioning requirement from one percent to 0.5 percent of the performing and overdue loan portfolio by the end of 2011.

The Bank maintained its net NPA ratio at 2.63 percent well below the banking sector average of 3.2 percent while maintaining a provision cover of 47.5 percent.

Theagarajah said that in addition to the improvement witnessed in core banking activities the reduction of taxation on the banking sector also contributed to the growth.

The Group comprising insurance subsidiary, joint venture investment banking operation and property development arm largely contributed to the improved Group performance recording a 50 percent growth in pre-tax profits to Rs. 1.83 billion and a 89 percent growth in post tax profits to Rs. 1.24 billion.

Theagarajah said, "with accelerated growth and development in the country the aggregate demand for credit is expected to exceed 25 percent this year and the financial sector is required to be in a position to cater to this demand.

HNB is strategically positioned to capture the growth opportunities, has identified the need to raise funding to support the anticipated balance sheet growth while keeping in mind the stringent capital requirements proposed under Basel III regulations."

To strengthen the capital base the Bank recently announced a new issue of shares by way of a Rights Issue. Its last was in 2004.

To give existing shareholders a greater benefit from the Rights Issue, the Board of Directors of the Bank has recommended an allocation on the basis of one for every five ordinary shares held.

The issue of 71,507,870 new ordinary shares will comprise 57,480,039 voting shares and 14,027,831 non-voting shares.

The voting share would be offered at Rs. 219/50 and non-voting share at Rs. 119/50.

The Bank is expected to raise Rs.14.3 billion by way of the proposed Rights Issue.

Singapore raises 2011 growth forecast

Singapore on Thursday raised its 2011 growth forecast to 5.0-7.0 percent from 4.0-6.0 percent on expectations that major economies led by the United States will continue to rebound.

Improved business and consumer spending in the US and Europe, along with Asia's continued steady growth are expected to boost Singapore's export-led economy, the Ministry of Trade and Industry said in a statement.

"The advanced economies remain on a path of modest recovery," the ministry said. "The near-term external environment is expected to be conducive to Singapore's growth for the rest of 2011," it added.

Growth in Singapore's key manufacturing sector, which accounts for nearly a quarter of gross domestic product (GDP), is also expected to boost the economy, according to the ministry.

It said the opening of new production facilities in the chemicals industry and better global demand for biomedical products will lift manufacturing this year. Despite the revised outlook, the ministry cautioned Singapore still faces several external risks.

These include Europe's sovereign debt crisis, high oil prices and disruptions to Japan's industrial sector from the quake-tsunami crisis in March, the ministry said.

"Barring any escalation of these downside risks, the near-term outlook for the Singapore economy remains positive," it said.

Singapore's economy, valued at almost Sg$285 billion ($230 billion) in 2010, grew at a record 14.5 percent last year.

The ministry in the same statement said the economy grew an annual 8.3 percent in the first quarter ended March, which was slightly lower than its initial estimate of 8.5 percent.

Growth in the January-March period was largely powered by the manufacturing sector which expanded 13.1 percent from a year ago, it said.

The construction sector grew an annual 2.4 percent and the services producing industries surged 7.3 percent.

"Overall, first quarter GDP growth has been broadbased and robust," analysts from Singapore's DBS Bank said in a commentary.

"Going forward, while we expect economic growth in the second quarter to be the weakest given the drag from the high oil prices and the Japan crisis, underlying growth momentum should reaccelerate in the second half of the year."

AFP