The empirical evidence shows that the 2Q credit growth is usually stronger than 1Q credit growth.Despite the historically low benchmark rates the banking group was able to record an increase in Net Interest Income (NII) of 17 percent YoY to Rs. 2.1 billion, demonstrating bank’s prudence management of asset and liability.Despite the narrowing industry interest spreads the bank maintained its net interest margin at 3.38 percent from end December 2013. In spite of the continuous push for US $ 250 million international fund raiser last year by the government, the bank did not do so citing unfavorable international capital market rates but managed to raise around US $ 200 million during the 1H14 as medium to long term funds with tenors ranging from 18 months to 8-years.Further, in September the bank entered in to an agreement with Proparco and FMO to receive US $ 75 million to support financing of projects in the renewable energies, agroindustry and water supply sectors.Net fee and commission income however fell 7.4 percent YoY to Rs.663.4 million for the 3Q14.

Meanwhile the loan loss provisions rose slightly by Rs. 2.6 million for the quarter under consideration and the gross nonperforming loan ratio of the bank stood at 2.44 percent improving from 2.48 percent end December 2012 and very much better than the industry average of 5.6 percent end August.The total operating expenses rose 6.5 percent YoY or Rs. 93.5 million of which the personnel expenses rose the most by Rs.128.2 million for the quarter.
“The bank’s cost to income ratio continued to improve and was 44 percent as at 30 September 2014, which was well below that of the banking industry,” the bank said in a statement.

NDB Bank on a standalone basis grew its asset base by 27 percent to Rs. 254.8 billion during the nine months to end September and they are in talks with the DFCC Banking group (which has an asset base of Rs.196.8 billion) to create a mega development bank with a combined asset base of Rs.1 trillion under the ongoing financial sector consolidation plan.

Meanwhile for the nine months ended September 2014 the NDB group posted a net profit of Rs.3.3 billion (EPS of Rs.20.45), up 49 percent YoY on a NII of Rs.6 billion.For the same date, the Bank of Ceylon had a 9.92 percent stake in the MDB group followed by 9.7 percent by Employees Provident Fund and 5.69 percent by Sri Lanka Insurance Corporation Limited - General Fund.