NSB records robust performance in first half

• PBT up 15.5% to Rs.4.3bn
• PAT up 15.2% to Rs.2.3bn
• Pays Rs.4.8bn in taxes and levies 

The National Savings Bank (NSB) demonstrated a robust performance during the first half of 2019 (1H19) amidst subdued macroeconomic and market conditions and witnessed a profit before tax (PBT) of Rs.4.3 billion, a growth of 15.5 percent compared to corresponding period of 2018.

The bank recorded a profit after tax (PAT) of Rs.2.3 billion, an increase of 15.2 percent over the same period last year, despite the loss of withholding tax (WHT) on government securities amounting to Rs.1.3 billion during first six months of 2019 over the same period 2018, due to the removal of WHT benefits with effect from April 1, 2018.  Also, an additional tax of Rs.832.7 million had a negative impact on the profit during 1H19 compared to the same period last year that resulted from the implementation of the Debt Repayment Levy (DRL), which came in to effect on October 1, 2018 onwards. 

The bank has contributed Rs.4.8 billion to the government in way of taxes and levies during the period under review.  Total income grew by 6.2 percent to Rs.59.1 billion whilst total operating income observed a growth of 15.3 percent to reach Rs.15.1 billion. 

Net interest income (NII), which contributed to 90.9 percent of the total operating income, grew by 10.9 percent to reach Rs.13.8 billion over the same period last year. 
Net interest margin (NIM) improved to 2.61 percent during six months ended June 2019, against 2.39 percent reported during the same period last year, owing to growth in interest income that outsets the growth of interest expenses. Further, the net fee income grew by 30.7 percent to Rs.499.2 million benefitted by the increase in business volumes. 

The net gain on trading amounted to Rs.663.9 million during the period under review, growing significantly against the loss of Rs.45.2 million reported in the same period last year.
Administrative and overhead expenses during the first six months of 2019 rose in line with the enhancement of business activities. 

Depreciation and amortisation on tangible and intangible assets increased by 65.8 percent due to investments made in branch network and digital infrastructure.

However, the impairment charge for the six months ended June 30, 2019 declined by 36.7 percent over the same period last year, fuelled by the redemption of the Sri Lanka Development Bonds (SLDB), which matured in 3Q18.  

The resultant cost to income ratio improved to 51.3 percent for the period under review from 54.5 percent in 1H18. 

The total assets of the bank grew by 5.2 percent over December 31, 2018 to reach Rs.1.1 trillion supported by growth in customer deposits. Customer deposits reached Rs.907.8 billion, up by 8.1 percent over the end-December 2018. 
The net loans and advances also rose by 5.7 percent to Rs.447.8 billion at the end of December 2018. At the end of 2019 first half, the bank had managed to maintain the gross non-performing loan (NPL) ratio at 1.69 percent, which is one of the lowest in the banking industry, demonstrating the higher asset quality of the bank.  The bank has successfully implemented and complied with the new accounting standard on leases – SLFRS 16, which came into effect from January 1, 2019. So, a sum of Rs.895.8 million of new assets was recognised and disclosed under ‘Right of used assets’ in the financial position for the period ended June 30, 2019.  Complying with the Central Bank of Sri Lanka’s (CBSL) directions on capital requirements under Basel III, the Tier I and total capital adequacy ratios of the bank as of June 30, 2019 were 12.647 percent and 15.197 percent respectively, well above the statutory minimum requirement of 10 percent and 14 percent respectively.  As another milestone in the NSB journey, the bank has received the Payment Card Industry Data Security Standard (PCI-DSS) certification—the cardholder data security standard accepted worldwide— and became the first State bank to achieve the PCI-DSS Certification. 

The bank received the certificate of compliance for PCI-DSS Version 3.2.1 from Qualified Security Assessor (QSA), SISA. 

The PCI Security Standards Council (PCISSC), the governing body of PCI-DSS, is a global organisation for promoting Payment Card Industry Standards for the safety of cardholder data across the globe.