NDB shows resilience and strength in most challenging year

• 4Q growth moderates due to deceleration in credit growth 
• Asset quality improves slightly; reports higher provisions
• Records total asset growth of 18% to Rs.627 billion

Growth at National Development Bank PLC (NDB) moderated during the quarter ended December 31, 2020 (4Q20) as new set of lockdowns from October decelerated the pace of loan growth, though the bank navigated the pandemic induced challenges successfully in FY20.

NDB reported net interest income of Rs.4.51 billion for the three months under review, slightly down from Rs.4.68 billion in the year earlier period, as growth in new loans slowed, payment holidays kicked in for the second time and lending rates fell sharply, narrowing the margins. 

NDB gave only Rs.600 million in new loans in the final three months, compared to Rs.14.1 billion in the September quarter. The bank’s loan book was at Rs.443.5 billion by end-December, up from Rs.34.5 billion in the entirety of the year. 

The bank’s net interest margin declined to 3.07 percent from 3.53 percent at the beginning of 2020. 

NDB said the moderation in the gross income reflects the “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”. 

The bank slightly improved its asset quality as measured by the gross non-performing loans ratio to 5.35 percent from 5.57 percent in September, although it remains above 4.77 percent at the start of the year. 

NDB provided Rs.1.15 billion on individually large customers as possible loan losses, while the provisions for the rest of the loans were at Rs.932.9 million in the final three months of the year, both of which were higher than Rs.602.3 million and Rs.562.6 million provided in the same quarter in 2019.

The bank saw the deposits accumulating during the year by as much as Rs.85.0 billion, more than twice the loans, out of which Rs.26 billion came in the final three months to make the total deposit base of the bank to Rs.490.3 billion. 

NDB reported earnings of Rs.5.63 a share or Rs.1.25 billion for the October-December quarter compared to Rs.5.17 a share or Rs.1.84 billion in the same period in 2019. 

The bank share ended at Rs.89.00 a piece yesterday, 40 cents or 0.45 percent higher. 

In the meantime, NDB during FY20 recorded a total asset growth of 18 percent to Rs.627 billion. For FY20, NDB reported earnings of Rs.21.99 per share or Rs.5.1 billion compared to Rs.20.53 per share or Rs.4.7 billion.

The government has 34 percent stake in NDB via Employees’ Provident Fund, Employees’ Trust Fund, Bank of Ceylon and Sri Lanka Insurance Corporation.