NSB records record-breaking performance for first 9 months of 2021

National Savings Bank (NSB) recorded its highest ever profit for a period of nine months in the first nine months of 2021, showing its COVID resistance, strength and continuous financial resilience.

Against the backdrop of COVID-19 impact on the economic activities, the PBT for the first nine months of 2021 was Rs.20.3 billion, which marks an increase of 170.6 percent, from Rs.7.5 billion recorded in the same period last year, while the PAT was Rs.15.6 billion, with an increase of 258.6 percent, from Rs.4.4 billion in 2020. Gross income of the bank grew by 5.8 percent to Rs.99.2 billion during the nine months of the year, from Rs.93.7 billion recorded in the corresponding period, last year. During the period under review, the interest income has increased by 6.8 percent to reach Rs.96.9 billion, while the interest expense has decreased by 15.7 percent to Rs.56.7 billion, due to the prevailing lower interest rate regime, which leads to lower interest expenses for the deposits as well as borrowings despite the substantial growth in the deposit base during the nine months.

The increase in interest income together with the considerable reduction in interest expenses supported the net interest income (NII) to surge by 71.6 percent to Rs.40.1 billion, against Rs.23.4 billion stood during the same period last year. Consequently, net interest margin (NIM) clocked in 3.68 percent at the end of nine months of 2021, higher against the 2.56 percent as at the same period last year. 

Net fee and commission income grew by 46.1 percent to Rs.2 billion, from Rs.1.4 billion, mainly driven by the increase in fee and commission income, due to conversion/renewal of the existing loans to reduced interest rates as well as increased foreign remittances and coupled with fees generated through digital platforms to where the customers shifted under social distancing and health guidelines. 

The increase both in NII and non-interest income led the total operating income to record a rise of 60.6 percent to Rs.42.3 billion as at September 30, 2021. Operating expenses during the period of nine months of 2021 rose by 21.9 percent to Rs.14.6 billion compared to the corresponding period of the previous year, which is mainly attributable to the increased personnel expenses, owing to the provisions made for the Collective Agreement due in 2021. Meanwhile, the bank’s cost-to-income ratio decreased to 34.7 percent at the end of the third quarter of  2021, compared to 45.7 percent reported in the third quarter 2020. Impairment charges during the period under review decreased to Rs.2.8 billion by 38.3 percent compared to the same period last year. The bank has carried out a prudent approach when calculating the impairment charges, considering that the outbreak of COVID-19 has caused disruption in business and economic activities, along with the uncertainty and volatility prevailing in the global and local economy and other holistic factors. However, the gross NPL ratio increased to 3.51 percent, mainly owing to the reclassification of some loans and advances under debt and other instruments.

The bank generated a return on equity (RoE) of 34.86 percent and return on assets (RoA) of 1.86 percent at the end of September 2021. The total asset base of the bank grew at 13.6 percent to reach Rs.1.55 trillion against the Rs.1.36 trillion reported as at the end of December 2020, mainly contributed by the growth in customers’ deposits, which increased by 12.7 percent to Rs.1.39 trillion compared to the deposit base reported at the end of December 2020. There is an increase in the pattern of saving of the customers despite, the impact of COVID-19 on the economy and lifestyle of the customers. 

During the nine months ending September 30, 2021, NSB had mobilised Rs.158.2 billion and continued the momentum of mobilising low-cost funds during the period under review by mobilising Rs.44.2 billion.  Loans and advances witnessed only an increase of 2.7 percent to Rs.530.8 billion over the last year December figure of Rs.516.8 billion, underpinned by the conversion of Rs.59.4 billion loans and advances under the ‘debt instruments’. However, without taking the converted loans into consideration, the total loans and advances demonstrated a growth of 16.1 percent, triggered by personal loans as well as loans to state-owned enterprises (SOEs). 

Complying with the direction of the Central Bank of Sri Lanka (CBSL), the capital position of the bank remained strong and stood well above the revised minimum statutory requirements imposed by the regulator, consequent to the COVID-19 pandemic. The Tier 1 capital and total capital ratios stood at 11.576 percent and 13.932 percent, respectively at the end of September 2021, well above the statutory requirements of 8.00 percent and 12.00 percent, respectively. The leverage ratio of 5.49 percent too was well above the minimum requirement of 3.0 percent.