NSB records steady growth in retail lending

The National Savings Bank has granted 12,211 loans during the first half of 2012 consisting of 4,764 housing loans and 7,447 personnel loans and the majority of these loans were granted at rural level through the ever-expanding islandwide branch network, a media release stated.

The retail lending of the Bank increased to Rs. 101 b, recording a growth of 30.5 percent compared to Rs. 78 b during the first half of 2011. The housing loan portfolio of the Bank recorded a growth of 17.8 percent while pawning advances recorded an impressive growth of 48.5 percent during the first half of the year.

Profitability of the Bank for 1H 2012 declined compared to the corresponding period last year. The Bank said that it is mandatory that the Bank invests a minimum of 60 percent of its deposits in government-guaranteed securities and as at end June 2012, the Bank had invested Rs. 303 b in government securities which is 73 percent of the total deposits, 95 percent of the total investments and 64 percent of the total assets.

In an upward moving interest rate environment, there is a considerable time lag of repricing of government securities, particularly Treasury Bonds, compared to loans and advances and other investments and as a result interest income of the Bank increases at a lower rate. Repricing of deposits is faster than that of government securities due to the short-term nature of deposits and medium to long-term nature of government securities. These have led to lower profits in the first half of 2012.