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| Sunday, 22 September 2002 |
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Business |  |
| News Business Features Editorial
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NDB positioned for further growth The National Development Bank (NDB) has demonstrated its resilience in an environment where economic activity remained slow during the first half of 2002. Due to GDP growth being only 0.1 per cent during the first quarter of the year, demand for project loans was low during this period, although there are encouraging signs of late of a revival of investment interest in some economic sectors. The Group recorded a profit after tax of Rs. 543 million for the half year, compared with Rs. 334 million for the corresponding period in 2001, an increase of 63 per cent. In a difficult operating environment, with interest rates declining, and business activity subdued, the bank was able to maintain its level of net interest income through focused Treasury management. The bank made provisions for credit losses of Rs. 149 million (Rs. 82 million in 2001) during this period. Provisions have been made in excess of Central Bank minimum requirements, in the context of present market conditions, for example, on valuation of security on non-performing loans (NPLs). Non-interest income increased by 33 per cent to Rs. 509 million, of which income and gains from quoted shares contributed only Rs. 28 million (compared with a loss of Rs. 24 million for the corresponding period in 2001), reflecting the efforts of the management to reduce profit volatility resulting from share market investments. Strong contributions to Other Income came from Group companies, dividends on preference shares, banking fees and commissions. Overhead costs were kept flat at the bank. Profit at both bank and group level has been boosted by the removal of the tax surcharge this year. The financial strength of the group, in terms of capital adequacy (tier 1 and tier 2 is 19 per cent for the group and 14 per cent for the bank), loan provisioning and liquidity management, remains at a high level. The NDB Group is therefore in a strong position to respond to new opportunities, to meet future challenges and to implement its long-term strategy. |
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