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| Sunday, 7 December 2003 |
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| News Business Features Editorial
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Healthy performance from NDB Bank NDB Bank's third quarter results for 2003 indicates a good performance from the bank boosting its steady growth during the year. The bank's net income grew by 49 per cent to Rs. 592 million, in the first nine months of 2003, relative to the corresponding period last year. Profit before tax (before the write-off of goodwill) of Rs. 236 million and profit after tax (before goodwill) of Rs. 164 million, significantly exceed the corresponding figures for last year of Rs. 129 million and Rs. 104 million. The bank's profits (before goodwill) represent a return on equity of 24.5 per cent and return on average assets of 1.4 per cent when annualized. The cost to income ratio also improved to 50 per cent (before goodwill write-off) as at September 30, 2003, compared with 63 per cent for the nine months ended September 2002. The bank has changed its accounting policy on intangible assets, to fully write-off the goodwill arising on the acquisition of the ABN Amro Bank - Colombo operations this year. This move would remove the limitation on the declaration of dividends, posed by the Banking Act No. 30 of 1988, leaving the bank free to declare a dividend once the goodwill is fully written off. While the capital adequacy and liquidity ratios are in compliance with the minimum stipulations of the Central Bank of Sri Lanka (CBSL), the limited capital base continues to constrain the growth of its credit portfolio. This limitation will be overcome with the proposed merger with the National Development Bank. The bank has continued with its aggressive provisioning policies, which are more stringent than the minimum requirements of the CBSL. This is reflected in the high quality of the loan portfolio, and consequently in the high quality of earnings. While non-performing loans, as a percentage of loans and advances, remained low at 5.5 per cent provisions (excluding interest reserved) amounted to 79 per cent of the non-performing loans. Specific provisions for doubtful debt amounted to Rs. 59 million for the period. During the year, the bank continued to work towards the development of its retail banking area, through its branch and ATM network. The bank now has five branches in Colombo (including two supermarket-style branches) as well as branches in Kandy and Matara. |
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