National Development Bank PLC (NDB) released its financial statements for the six months ended June 30, 2022 to the Colombo Stock Exchange recently.
Financial performance recorded was moderate yet resilient against a highly challenged socio-economic backdrop that prevailed during the review period.
Director and CEO of NDB, Dimantha Seneviratne said, “With our strategy recalibrated to match external developments well on track, NDB was able to achieve its core banking revenue targets.
“The unprecedented depreciation in the exchange rate together with severe macro-stresses that resulted in higher provisions for investments, and provisions made on a prudent basis on loans to factor in expected stresses narrowed our profits.
“While we are augmenting the Bank’s strength and stability through robust risk management frameworks amidst unique challenges faced by the financial services industry, we are also sharpening our focus on customer-centricity, so as to deliver precise solutions and support them towards gradually emerging from their economic woes,” he added.
NDB posted a pre-tax profit of Rs. 2.7 bn for H1 2022. Although a reduction of 56% over the first half of 2021 (the comparative period), this deceleration in profits was equitable compared to the considerable quantum of impairment charges factored in for the period, and is predominantly attributable to strong revenue generation and expenses management by the Bank amidst external challenges. Taxes netted Rs. 973 mn, with post-tax profits closing in at Rs. 1.7 mn. The Bank recorded healthy core banking performance as reflected in a total operating income of Rs. 22.4 bn, an increase of 46% over the comparative period, bolstered by both fund and non-fund based income. Net interest income, for the period under review was Rs. 15.0 bn up by 45% over the comparative period. Interest income and interest expenses grew simultaneously at 46% and 47%, due to the increasing market rates for loans and deposits triggered by an 8.5% increase in the Standing Deposit Facility Rate (SDFR) and Standing Lending Facility Rate (SLFR) over the first half of 2022.
The resultant net interest margin for the period was 3.77% (2021: 3.25%). On non-fund based income, net fee and commission income improved by 19% to Rs. 3.1 bn, while sources of other non-fund based income totalled Rs. 4.3 bn, predominantly benefitting from the revaluation gains on the Bank’s foreign currency denominated reserves, due to the sharp depreciation of the Rupee against the US dollar.