Financial Times

NDB increases interim profits by 28% after merger
The NDB Group recorded profit before tax of Rs 1,348 million for the period ended 30 September 2005 compared with Rs 1,054 million for the corresponding period last year, an increase of 28%.

The net interest income and net other income increased by 21% and 7% respectively over the comparative period, a company statement said.
The financial statements reflect the merged position of National Development Bank Limited and NDB Bank Limited. The merger was finalised on 1 August 2005.

”The net interest income of Rs 1,959 million for the period compares with Rs 1,618 million for the corresponding period last year,” the bank said.
“The increase of 21% over the corresponding period last year was mainly due to the increase in the lending portfolio of the commercial banking operations of Rs 2 billion.

“This faster growth in commercial banking lending compensated for the slight decline in long term loans. There was also an increase of Rs 56 million in the commercial banking fees, forex and commission income over the comparative period.“

Overheads have risen by 21% over the corresponding period last year primarily due to the substantial investments made in new branches increasing the network from 13 to 23. This considerable expenditure now, will realise benefits in future years.

Profit attributable to shareholders increased by 13% over the corresponding period last year in spite of the effective tax rate for the period rising to 37% compared with 29% for the corresponding period last year.

With the expansion of the commercial banking franchise, customer deposits have increased by Rs 2.3 billion (21%). The merged Bank’s portfolio quality continued to improve with NPLs reducing from Rs 2,518 million as at the last year end to Rs 1,885 million as at 30 September 2005, a reduction of 25%.

The NPLs ratio for the Bank was 5.2% compared with 9.9% as at 31 December 2004. Total provisions as a percentage of NPLs for the Bank was 93%, while specific provisions coverage was 85% as at 30 September 2005.

Eagle Insurance Company Limited’s consolidated revenue for the period was Rs 3,020 million reflecting a growth of 14% over the previous year. Gross written premium for life and non-life insurance of Rs 2,732 million also grew by 14% over the previous year. Operating profit for the period of Rs 145 million was 27% over the first nine months of 2004.

NDB Investment Bank and NDBS Stock Brokers also contributed significantly to the profit growth of the Group due to improved market conditions.

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