NDB’s total assets crossed the Rs. 600 bn mark in 2020, with the asset base closing at Rs. 627 bn by end 2020, resulting in an impressive YoY growth of 18% which translated to a quantum growth of Rs. 97 bn. Gross Loans and Receivables however moderated in growth at 8% YoY to Rs. 444 bn (quantum growth of Rs. 34 bn). Growth stemmed from all business sectors.
Gross income growth moderated to 3% in 2020 compared to 2019 (YoY) to Rs. 60.7 bn, reflecting reduced business volumes in the year, impact of interest rates concessions and interest deferments stemming from moratoria granted - phenomena experienced across the industry due to the effects of the pandemic.Interest income slightly dipped over that of 2019, to Rs. 53 Bn, whilst interest expenses reduced by 1% to Rs. 35 Bn, largely attributable to the rate reductions led by the CBSL as stimulus to economic growth. Pressure exerted on the NIM by interest rate concessions on loans brought the ratio down to 3.1%.
National Development Bank posted solid financial results for the financial year ended December 31, 2020, demonstrating its strength, sustainability in generating operational revenue and resilience in withstanding unprecedented challenges. The Bank and the Group’s performance as reflected in the financial statements was released to the Colombo Stock Exchange on February 18, 2021.Net fee and commission income bolstered overall income with a growth of 9% YoY to Rs. 4 bn. Exponential growth in the use of digital banking services, driven by the pandemic impact and the user-friendly features available in the NDB NEOS digital banking platform together with the Bank’s continued focus on enhancing fee based income,were key contributors in this aspect. Net gains from trading for FY 2020 was Rs. 967 mn a marginal decrease of 2% YoY.
However, the Bank realised capital gains from Government Securities portfolio, as reflected under net gains from derecognition of financial assets amounting to Rs. 1.5 bn. Total Operating Income recorded a healthy growth of 7% to Rs. 25.4 bn.
Impairment charges for loans and other losses for FY 2020 was Rs. 6.8 bn, an increase of63%YoY. Individual impairment increased by 41%, while collective impairment increased by 113% to Rs. 3.8 bn and Rs. 2.4 bn. Provision charges increased in line with the growth in the loan book and provisions made at both collective and individual levels in response to elevated risks caused by the pandemic and other stresses.
The regulatory non-performing loan (NPL) ratio for 2020 was 5.35% (2019: 4.77%) which is on a gradual increase, reflecting the wider industry NPL behaviour.
The Bank also made significant provisions for financial investments owing to the decline in macro economic indicators.