NDB Bank eyes regional expansion under second leg of five-year strategic plan

National Development Bank PLC is eying expansion opportunities in the region after it delivered some solid performance during both 2020 and 2021 with robust growth in its asset base, capital profile, liquidity and returns to its shareholders. 

The bank is making progress on its 5-year strategic plan unveiled in mid 2020 under the title ‘ Voyage 2025’ charting its way towards becoming the ‘Primary Banking Group of Choice’. 
According NDB Director/Group CEO Dimantha Seneviratne, the bank is now keen on pursuing regional expansion opportunities during the second leg of its 5-year strategic plan.   “Following strong growth over the past few years, we will also seek to consolidate our portfolio, focusing on quality and profitability to ensure continued delivery of shareholder value,” he said in his annual letter to shareholders. 

“The group is also keen to pursue inorganic growth opportunities in the region, as it enters its next phase of growth,” he added.
However he wasn’t specific as to how the bank plans to expand its operations beyond Lankan shores—whether by way of acquiring a regional lender or setting up a representative office in a regional country.

Seneviratne always had his eyes on M&A opportunities with aspirations to expand regionally. His objective appears to have come closer to becoming a reality with the bank’s solid growth in assets and earnings. It also received a significant capital boost from Norfund—the Norwegian Investment Fund for developing countries—last year. 

Norfund invested Rs.2.8 billion in return for 9.99 percent stake in the bank while the bank raised Rs.9.5 billion in equity capital last year in a combination of a rights issue and private placement. 

Besides, in the latter part of last year, it also bolstered its Tier II capital via a Rs.8.0 billion debenture issue. 

While the bank remains determined to repeat similar growth this year, the gloomier economic outlook could caste a shadow over its ability in accomplishing its near term objectives as concerns are rising over borrowers’ ability to service loans amid soaring inflation and interest rates. 

The Monetary Board, which brought forward their April 6 meeting to April 4, is widely expected to deliver another 100 basis points or more hike in standing lending facility rate to quell the inflation and to contain foreign exchange outflows. 

The country fell into economic abyss since February with inflation taking a wild turn and fuel, cooking gas and other commodities in short supply. Hours-long daily power cuts were also added to the numerous other hardships as the foreign exchange crisis spiralled out of control. 

In 2021 NDB reported earnings of Rs.22.44 a share or Rs.6.9 billion compared to earnings of Rs.21.99 a share or Rs.5.12 billion, up 35 percent.