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| Sunday, 19 February 2006 |
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NDB Bank profits soar after merger All areas of the Bank and the Group performed well in the year of the merger with NDB Bank Ltd. The merger was finalised on August 1, 2005. NDB group recorded a profit before tax of Rs. 2,037 million for 2005 compared with Rs. 1,287 million for 2004, an increase of 58%. The profit after tax for the group increased by 81% from Rs. 805 million in 2004 to Rs. 1,459 million in 2005. The profit attributable to shareholders increased by 74% from Rs. 703 million to Rs. 1,222 million during the year. The core banking business has made steady progress during the year. The net interest income and net other income increased by 36% and 21% over the last year. The gross lending portfolio of the merged Bank increased from Rs. 34 billion to Rs. 37 billion, an increase of 8%. The Bank continued to generate significant revenue out of the equity markets. Income from equity for 2005 was Rs. 577 million when compared with Rs. 482 million for 2004, a 20% increase. It made a marked improvement during the year in its position with regard to non-performing loans (NPLs), The merged banks NPL ratio reducing from 8.2% as at December 31, 2004 to 4.2% at the end of 2005. Provisions against the NPLs of the Bank were increased to 82.3% as at the end of 2005 as against 65.9% as at December 31, 2004. The effective overall tax rate of the Bank inclusive of VAT on financial services was 35% for the year when compared with 26% for the last year. However, the effective tax rate on banking income alone was 52% in 2005 compared with 40% in 2004 and is likely to rise further in 2006 due to the increase in the rates of income tax and VAT on financial services to 35% and 20% respectively, as announced in the last budget. There were strong performances from the group companies during 2005. Eagle Insurance Company Ltd consolidated revenue for the year was Rs. 4,276 million reflecting a growth of 15% over the previous year. The net profit after tax of Rs. 515 million, a growth of 103% over 2004, was due to focused management strategies which resulted in significant growth in the core business. NDB Investment Bank Ltd and NDBS Stockbrokers (Pvt) Ltd also contributed significantly to the profit growth of the group due to increased capital market operations and improved market conditions. During the year, NDB Investment Bank Ltd was responsible for the two largest ever initial public offers (IPOs) on the Colombo Stock Exchange. These massive IPOs were undertaken on behalf of LIOC and Dialog. The Group earning per share increased significantly from 13.08% to 22.40% and the return on equity also increased significantly from 8.64% to 14.31%. |
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