NDB continues growth momentum

National Development Bank (NDB) and its group of companies posted a growth of 49% in profit, attributable to shareholders, recording Rs. 3,276 million for the nine months ended September 30, 2014, compared with the corresponding period last year.

This impressive performance was due to growth in business volumes, effective management of portfolio quality and concerted cost management carried out across the Group, keeping in line with the Bank's focused business strategy.

The Group profit after tax for the nine months ended was Rs. 3,309 million which was a 50% growth over the corresponding period, while profit before income tax was Rs. 4,422 million, which was a 34% growth.

The Group total operating income increased by 16% to Rs. 9,673 million, strengthened by enhanced performance in core banking operations.

The Bank's strategic business focus in managing its lending, investment and borrowing portfolios resulted in a 15% increase in net interest income of Rs. 5,781 million, over the corresponding period, despite narrowing interest spreads within the industry.

Net fee and commission income also grew by 11% to Rs. 1,332 million. Net gains from trading and financial investments also contributed positively, towards the increase in overall operating income.

Impairment charges for loans and other losses was Rs. 324 million for the nine months ended September 30, 2014 as compared to a provision charge of Rs. 226 million for 2013.

The impairment provisions represent the Bank's sound judgment in assessing the fair value of the impaired loans, based on objective evidence of future recoveries and are in accordance with the Bank's stringent risk management policies.

The Group's operating expenses for the nine months was Rs. 4,305 million and recorded only a 7% increase, amidst aggressive business expansion across the Bank and its Group companies.

Accordingly, the Bank's cost to income ratio continued to improve and was 44% as at September 30, 2014, which was well below that of the banking industry.

The Group's growth momentum continued with a healthy balance sheet growth of 26% up to Rs. 261 billion as at September 30, 2014. Major contributors to the asset growth were loans and receivables and investments.

The loans and receivables grew by 34% to Rs. 165 billion and by 20% over the year-end, which compares well with industry growth levels.

The Bank's Non-Performing Loan (NPL) ratio of 2.44%, which is one of the lowest in the industry, is testimony to the strong governance and risk management framework in which the Bank operates.

The Bank's Customer Deposits reached Rs. 151 billion which is a growth of 27% and grew by 16% compared December 31, 2013.

The CASA ratio of the Bank increased to 26% as at September 30, 2014 and is a considerable improvement, given that the commercial banking part of the Bank is less than a decade old.

The improvement in the CASA ratio demonstrates the strong blueprint that the Bank has set in the retail banking arena. Strengthening its ties with international development funding agencies, NDB entered in to an agreement of US $ 75 million with Proparco and FMO in September, 2014.

Of these funds, US $ 60 million will be infused by Proparco, the subsidiary of Agence Française Développement of France and US $ 15 million by its Dutch counterpart FMO, under a joint facility to support the financing of projects in the renewable energy, agro-industry and water supply sectors.

NDB enjoys expertise perfected over decades in financing long-term projects.

These funds to be received will strengthen NDB's contribution to the sectors which are directly linked to the development of the national economy.

NDB Group's capital adequacy ratios reflect a strong capital position. Tier I capital of the Group as at September 30, 2014 was Rs. 26,516 million with a Capital Adequacy Ratio (CAR) of 13.30%. Tier I and II capital was Rs. 36,330 million with a CAR of 18.22%.