NDB Group's sustainable core banking profits have increased by 34% during the year 2010, recording a Group Profit Attributable to Shareholders (PAS) of Rs 2 billion, an increase of 28%, with a Group ROE of 13.67.%, excluding exceptions.
The unprecedented portfolio growth of 27%, with loan delinquencies maintained at an all time low of 1.9%, one of the lowest in the Industry, healthy and well structured balance sheet, and an affirmed rating of "AA (lka)" by Fitch Ratings provides its stakeholders the much desired comfort of their investment. In fact the loans to total assets ratio which increased by 10% to 68% in 2010, makes it evident that the new loans created with the liquid funds will now reap higher returns.
Commenting on the 2010 performance, Russell de Mel, Chief Executive Officer of NDB Bank said that "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".
Flat PBT
The Bank's Profit Before Tax of Rs 3.4 bn, which is almost flat against 2009, reflects a drop of 6% at Profit After Tax level due to substantial capital gains of 2009 which were exempt from tax. It is worthy to note that there has been 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, thus confirming that its core business is sustainable under the emerging economic conditions.
Despite falling interest rates and higher returns on alternate investments the Bank's deposit base recorded a healthy growth of 19% from Rs 49 bn to Rs 59 bn during the year against an industry growth of 15.6%. It is noteworthy that the Bank's Current and Savings Accounts (CASA) ratio has also improved from 23% to 29% with the build up of granular savings and cash management offerings.
On a quarterly basis, both the lending portfolio as well as the deposit portfolio has shown significant growth potential during the fourth quarter, as new lending initiatives gathered momentum, thus providing a sound base for future earnings.
The Bank's Tier 1 Capital Adequacy Ratio of 12.79% and a Tier 1 & 2 ratio of 14.82% are well in excess of the regulatory minimum of 5% and 10% respectively, providing the much needed capital to support future growth plans.
The Bank paid an interim dividend of Rs 4.00 per share during the fourth quarter of 2010, out of the profits recorded during the year.
Loan portfolio
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%.
Despite measures initiated to increase capacity and out reach, improved internal efficiencies adopted throughout the Bank, resulted in a healthy Cost to Income Ratio of 45% for the period, which compares favourably with the industry ratio which is around 47%.
SME sector
The bank's 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 linking 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.
With a view of facilitating the development of sustainable livelihoods for those who are not within the mainstream of banking, NDB Bank introduced its SME banking scheme, 'NDB Divi Aruna' in June 2010 and has since extended this to several districts across Northern Eastern and Southern provinces of the country.
source - www.dailymirror.lk
No comments:
Post a Comment