NDB navigates macro-economic turbulence with moderate results

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National Development Bank PLC’s gross income for the three months under review ended 31 March 2022 (Q1 2022), performed satisfactorily – LKR 19.2 billion, a 22% growth over the comparative period in 2021 (YoY growth).

Core income sources of net interest income and net fee and commission income both performed well, propelling overall income. Net interest income was LKR 6.2 billion, a YoY increase of 21%.  The net interest margin improved to 3.43% in Q1 2022 from 3.25% as at end 2021.

The Bank recorded an impairment charge of LKR 6.4 billion for Q1 2022 on loans and on the Bank’s investment portfolio, which was a sharp increase of 192% over the comparative period.

On operating expenses, same for the period under review was LKR 2.7 billion. The Bank’s cost management strategies and vast benefits derived from automation of internal processes and digitisation of customer solutions enabled the Bank to manage the operating expenses increase at 6%, amidst high inflation. Denoting a period of challenge, Bank pre-tax profitability moderated at LKR 962 Mn, a reduction of 72% over the comparative period, affected by higher impairment charges as explained above, whilst post-tax profitability reached LKR 605 million.

Total assets of the Bank reached LKR 765 Bn by end March 2022, a 9% increase over December 2021 position.

Gross loans closed in at LKR 580 Bn, an increase of 10% translating to a quantum of LKR 54 billion.

Total shareholder equity stood at LKR 55.4 Bn, having been strengthened by a Tier I equity capital infusion of LKR 9.5 Bn in 2021. The Bank also raised LKR 8.0 billion via Basel III compliant Tier II debentures in the latter part of 2021, the timing of which helped the Bank optimise its cost of funds.

Customer deposits reached LKR 600 billion, with a YTD increase of 9%. CASA composition continued to improve, with the ratio reported at 28% by end Q1 2022.

Return on average equity and Earnings per share were 7.80% and LKR 12.48 respectively. Pre-tax Return on Average Assets was 0.96%. Regulatory ratios of Liquidity Coverage Ratio (Rupee), Liquidity Coverage Ratio (All Currency) and Net stable Funding Ratio stood well above the regulatory minimum requirement of 100% at 206.32%, 156.73% and 118.43% respectively.