Sri Lankan business group NDB, which has a presence in the banking, capital markets and insurance sectors, announced this week that it had achieved a "sustainable core banking profits increase by 34% during the year 2010." Also, indicated by the entity was that its "Group Profit Attributable to Shareholders (PAS)" was Rs. 2 billion, an increase of 28%, while "Group [Return on Equity]" was 13.67.%. Both of which were said to exclude exceptions, which were identified as being "gains from government securities and equity income.."
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| NDB Chairman P. M. Nagahawatte and CEO Russell de Mel |
Also noted by the group was that there was a "portfolio growth of 27%, with loan delinquencies maintained at an all time low of 1.9%," which it said was one of the lowest rates in the banking industry. It also indicated that its loans to total assets ratio increased by 10% to 68% in 2010, which it suggests will facilitate higher returns due to the new loans being "created with liquid funds."
These indicators were said to result from taking "advantage of emerging opportunities in lending as well as capital markets and insurance that witnessed a most welcome ‘bounce back’ during the year 2010." According to NDB Chief Executive Russell de Mel, who was quoted in the organisation's announcement; “The performance of the bank as well as the group during the previous year (2009) was highlighted by significant capital gains made from trading in Treasury Bills and Bonds which was influenced by falling interest rates and also by one off equity gains. Our philosophy is that whilst we seize these opportunities, thus maximising gains and returns, what is important is to sustain the core banking profits. Therefore, in 2010 the bank attempted to create a strong business model by improving its core banking income that is sustainable in the long run."
Also revealed was a "significant improvement in the core banking profits throughout the quarters as well, which has had a direct impact on the improvement in the full year returns." And that the NDB's banking arm's deposit base was privy to a "healthy growth of 19% from Rs. 49 billion to Rs. 59 billion during the year against an industry growth of 15.6%." At the same time, and on a quarterly basis, "both the lending portfolio as well as the deposit portfolio has shown significant growth potential during the fourth quarter."
Also suggested by NDB; "Prudent underwriting policies and well defined risk acceptance criteria helped the bank to maintain a high quality loan portfolio, improving its Non Performing Loans (NPL) ratio to 1.9% as at December 2010 from 2.5% an year ago, which compares well against the current Industry ratio of 5.3%. The provision cover on NPLs is at 76% with an Open Loan Position of 2.86%, signifying the minimum amount of stress on the Bank’s equity, on account of un-provided delinquencies. The overall provision cover is at 96%."
In addition; "With limited footprint and outreach, the SME sector recorded a significant portfolio growth of 63% during the year 2010. In addition to the traditional lending forms to SMEs the Bank also intermediated in facilitating industry verticals lining the small time producers with the large scale distributors and vice versa.
NDB has also taken the far sighted initiative of moving more towards customer centric cashflow based lending approach as opposed to the traditional collateral based lending creating greater inclusiveness at the bottom of the pyramid." |
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