NDB Group records Rs. 1.5 b PBT in Q1

The National Development Bank PLC (NDB) and its Group companies recorded a Profit Before Tax (PBT) of Rs. 1.5 billion and a Profit Attributable to Shareholders (PAS) of Rs. 1.2 billion for the first quarter ended March 31, 2014, signifying a robust beginning for the year.

Chairman, NDB Bank, Sunil Wijesinha	CEO Rajendra Theagarajah

Chief Executive Officer of the Bank Rajendra Theagarajah said that the NDB Group is focusing on its five-year strategy for business excellence, which takes cognizance of national development goals, and that the performance this quarter is a measured step towards achieving a solid overall performance in 2014.

He said that the NDB Group is energised for an exciting year ahead, harnessing strengths from the Group's rich repository of capital, the unique conglomerate structure and the pool of talent and expertise of its human capital.

NDB Group's PBT of Rs. 1.5 billion recorded a 106% increase while the PAS of Rs. 1.2 billion recorded a 135% increase over the corresponding quarter of March 2013.

These commendable Group profits accentuate the contribution by the improved core banking operations and the performance of the Group companies through their individual expertise, proficiency and collective synergies.

The core banking operations of the Group achieved a Net Operating Income of Rs. 3 billion, a growth of 27% over the corresponding quarter.

But the Net Operating Income at Bank level recorded a decline against the corresponding period, due to a one-off equity gain earned by the Bank during the first quarter of 2013.

NDB Group's subsidiary, NDB Capital Holdings PLC (NCAP) earned an exceptional equity gain of Rs. 5.3 billion through the strategic divestment of AVIVA NDB Insurance PLC to American International Assurance (AIA) Company Limited of Hong Kong in December 2012, which was transferred to the Bank from the Group in March 2013 via a share buy-back agreement with NCAP.

The Bank's Net Operating Income for the first quarter of 2014, when compared with the corresponding quarter adjusted for the aforementioned equity gain, recorded a 16% increase affirming the growth in its core banking operations.

Total Operating Income which includes Net Interest Income (NII), Net Fee and Commission Income and Net Gains from Trading Activities, recorded commendable growth levels over the comparative quarter at 14%, 35% and 289%.

These growth levels were on account of the skilfull asset and liability management, effective contribution of cross selling opportunities within the conglomerate set up and active money market participation across the NDB Group.

Impairment Charges for Loans and Advances increased from Rs. 23 million in the comparative quarter of 2013 to Rs. 126 million in the first quarter of 2014.

This was due to significant impairment charges made for few customers based on the Bank's prudent adoption of fair valuing the impaired loans, based on sound judgement and objective evidence of future recoveries.

In April 2014, the NDB Group divested its stake in Maldives Finance Leasing Company (Pvt) Ltd (MFLC) which was an Associate of the NDB Group, with a 35% shareholding.

NDB released Rs. 140 million out of the total original Investment of Rs. 165 million, which was written off in 2011 in the books of NDB due to MFLC making continuous losses. The provision release in the first quarter of 2014, with respect to the divestment, was Rs. 97 million.

Operating Cost management remains a prioritised strategic objective of the Group and the increase of 8% in Total Operating Costs for the first quarter in 2014 was well in line with the recorded business growth. The Cost to Income Ratio of 44% is below the budgeted levels for the Group, and also the corresponding figure for 2013.

NDB Group's Balance Sheet maintained its strategic growth momentum throughout the quarter, reaching Rs. 213 billion, a 3% increase over the Balance Sheet as at December 31, 2013.

The key driver of this growth was Loans and Receivables which grew by Rs. 8 billion over December 2013. In terms of asset quality, the Non-Performing Loan Ratio (NPL) for the first quarter of 2014 was 2.69%, compared to the 2.48% in December 2013, which was well below industry NPL levels.

Customer deposits were Rs. 135 billion, a 4% increase over December 31,2013. In March 2014, the Bank entered in to an agreement with the International Finance Corporation (IFC) for a syndicated loan of US $ 125 million.

The funds received via this agreement will be mainly routed to the SME sector, the backbone of the nation's economy and other eligible sectors that contribute towards nation-building.

The infusion of these loan proceeds will also boost the Balance Sheet of the Bank. The Bank's rich repository of capital continued to energise and strengthen the Bank's growth prospects, while meeting regulatory needs. The Tier I Capital Ratio was 11.70% while the Tier I and II Ratio was 17.36% as at March 31, 2014 and was well above the stipulated minimum regulatory requirements.

Shareholder Return indicators demonstrated a marked enhancement during the first quarter of 2014. The Group Earnings per Share (EPS) for the quarter was Rs. 29.66, an 80% increase over December 2013. Return on Shareholders' Funds also recorded an 80% increase from 10.7% in December 2013 to 19.3% in March 2014.

The Bank's market capitalisation as at March 31, 2014 was Rs. 29,444 million with a share price of Rs. 178.60, which resulted in a Price Earning (PE) Ratio of six (times).

The national economy is experiencing rapid development and has ample opportunities for business growth. The banking sector has been specifically identified as an industry to be a predominant contributor in this growth momentum.

Chairman of the Bank, Sunil Wijesinha said the bank is ready to embrace the opportunities that unfold within the industry and reshape and flex its structures to emerging national needs.

Wijesinha said that such changes would place shareholders, customers, employees and other stakeholders at the centre, ensuring that positive value is generated for their investments and that NDB is elevated from its present levels to a size that truly matters.