NDB to focus on local regional expansion, B’desh operations
National Development Bank PLC (NDB) will focus more of its investment banking in Bangladesh while expanding regionally in Sri Lanka, officials said.
The Bangladesh operation is a venture that was set up after the NDB Group acquired a controlling stake (77.8 per cent) in Capital Market Services Ltd, a licensed merchant bank in Bangladesh in 2009. “Through NDB Capital Ltd, we’ll focus on expanding our Bangladesh operation because there’s enough scope in Bangladesh,” Dimantha Seneviratne, who was appointed as the new CEO and Director earlier this year, told the Business Times on the sidelines of the HNB Investor Forum recently.
He said that NDB is also inclined towards local branch expansions. NDB’s customer deposits grew by 10 per cent, crossing the Rs. 200 billion mark for the first time in the bank’s history and reached Rs. 204 billion (2015: Rs. 185 billion), it was explained at this forum when Faizan Osman, Chief Financial Officer NDB noted that this figure in customer deposits was achieved by the bank in a gratifyingly short period of just over 10 years, since the bank attained commercial banking status in 2005.
“Increasing the bank’s CASA ratio from its current range of 22 per cent is a key strategic priority which is a challenge to the industry at large in an increasing interest rate environment, as depositors’ preference largely skews towards time deposits. This skewness is further augmented by the considerable interest rate gap that prevails between the savings and time deposits in the Sri Lankan banking and non-banking sphere, which will also pressurise the industry Net Interest Margins,” he said.
When queried why NDB doesn’t increase its savings account deposit interest rates slightly to address the CASA weaknesses, Mr. Seneviratne told the Business Times that NDB didn’t want to uplift the interest spent on entire savings base, but that NDB is reviewing the interest rates of their savings deposits. “However we have to keep in mind the unrestricted withdrawal ability given to savings. On the other hand we are coming up with couple of good Savings products that gives a very high interest rate that also gives the flexibility of withdrawals.”
NDB offers 12 per cent p.a. for 6 month and 12 month FDs (at maturity), but its standard savings rate is a mere 3.25 per cent p.a., rising to 5.25 per cent p.a. for special savings accounts.