NDB has demonstrated a robust growth momentum: CEO

This is the 11th of the Mirror Business-Colombo Stock Exchange (CSE) interview series, featuring the top executives of the S&P SL20 companies. Here, National Development Bank PLC (NDB) Director/CEO Dimantha Seneviratne talks about NDB’s performance, future plans and industry growth prospects.

What are the key milestones that the bank has achieved so far in 2017? 
Reflecting back on the first half, we have demonstrated a robust growth momentum, setting the precise tone for a successful year ahead.

Talking of the published figures, our post-tax profits grew by 45 percent in 1Q 2017, compared to 2016. PAT exceeded Rs.1 billion, reflecting the true potential within NDB. During the quarter, the total assets of the bank grew up to Rs.347 billion (4 percent from December 2016). Loans and receivables to customers recorded a notable growth of Rs.14 billion (6 percent) to reach Rs.241 billion. I think growth in customer deposits is one of the most notable achievements for the quarter, which recorded an impressive growth of Rs.24 billion (12 percent), thereby bringing the total customer deposits to Rs.228 billion. NDB led the industry and its peers, in liability growth in 1Q 2017.

NDB’s mobile banking application, which is widely recognized as one of the best mobile banking solutions in the country, achieved a milestone in May 2017 by crossing the Rs.1 billion mark for value of transactions performed during the first four months of 2017. This is an affirmation of NDB’s strong presence in the digital banking arena within the industry.

NDB initiated a rollout plan to come up with a new business strategy for the medium term. Dubbed as T20 Transformation, this strategy is devised in professional consultation with the International Finance Corporation (IFC) and spans up to the year 2020. The strategy has placed the bank on an ambitious and exciting growth mode, which is expected to deliver enhanced value to all our stakeholders.

We should also mention of our capital markets cluster led by NDB Capital Holdings Limited (NCAP). A 99.9 percent-owned subsidiary of NDB, NCAP in turn holds four subsidiary companies engaged in full-service investment banking (NDB Investment Bank Ltd), wealth management (NDB Wealth Management Ltd), investment advisory and securities trading (NDB Securities (Pvt.) Ltd) and management of private equity (NDB Zephyr Partners Ltd). The gamut of these companies creates a unique one-stop shop solution, which integrates a wide range of capital market solutions to our customers. This is a proposition, which is not offered by any other banking institution in the country. We also have our presence in Bangladesh, via the Bangladeshi investment banking entity, NDB via NDB Capital Ltd.

The local operations of NCAP earmarked a milestone during June 2017, when we moved to a dedicated and convenient location in Bauddhaloka Mawatha, Colombo 4, under the concept of a ‘Wealth House’. The fully-fledge venue will provide the Sri Lankan clientele with a state-of-the-art solution to their varying capital market needs, served by the experts in the industry.

NDB also received a number of external recognition both globally and locally. The Global Banking & Finance Review of UK recognized NDB with three awards, namely, Best SME Bank, Best Mobile Banking Application and Best Investor Relations of Sri Lanka for 2017. NDB’s marketing initiatives were recognized at the CMO Golden Globe Brand Excellence Awards held in Kuala Lumpur, Malaysia with the two awards titles: Award for Brand Excellence within the Banking & Finance sector and Award for Excellence in Social Media Marketing.

The bank’s mobile banking app was recognized yet again as the Runner-Up for the ‘Best Mobile Payment Application of the Year’ at the LankaPay Technnovation Awards 2017. By the way, this is the only ‘mobile banking’ app of a bank that was recognized at this awards. We also emerged as the winner for the ‘Best use of Mobile’ under the Financial Sector at the SLT ZeroOne Awards organised by Sri Lanka Telecom PLC.

Our investment banking arm, NDB Investment Bank Limited, was also recognized with two awards Most Trusted Investment Banking Brand, Sri Lanka for the year 2017 by the Global Brands Magazine and Best Corporate and Investment Bank of Sri Lanka at the Asiamoney Banking Awards. 
All these awards continue to motivate us to provide the best customer-centric solutions as we move forward.

 
While building on its original strengths the bank has ventured into new products and services over the years. What growth initiatives can be expected in the medium to long term? 
As previously mentioned, the bank has now embarked on a clearly defined, robust and ambitious growth strategy for the medium term. Stemming from this growth, we aspire to become a systemically important institute within the industry in the medium term.

We will increase our focus on the retail franchise and skew the business composition more towards retail and SME-oriented lending to make the best use of our branch presence. We will continue to harness strength from the development financing expertise NDB has inherited since inception, thereby furthering our stance in corporate and project lending. Microfinancing and financial inclusion will also be one of our focus areas, for the dual purposes of stimulating the growth of the bank as well as supporting the micro and unbanked segments in the country.

Our plans also include seamless integration of our various digital channels and thereby increase business volumes via these channels. We will continue to expand our physical branch network strategically, making our presence in the most needed localities of the country.

Our current network of 106 branches houses tremendous potential in expanding our franchise. Over 50 percent of these branches have been added on to the network within the past five years. We will relentlessly drive the teams within the network in generating new business and achieving growth.  

In your opinion, what challenges do you anticipate in the industry and could you elaborate on how the industry could evolve to better serve clients?
The biggest challenge that the industry faces, in my opinion, is continuously keeping the bank’s customers satisfied, whose requirements are varying. Customer dynamics, their preferences and lifestyles are seeing a rapid change. Technological advancement in various fronts has been a key cause of this and their expectations have to be met with innovative solutions.

It is important that the bank caters to precise customer needs with a high satisfaction ratio. Failing to do so poses the dire challenge of losing your customers to the competition. As such all our growth initiatives, innovations, etc. should be devised with the customer placed at the centre-point. 
Maintaining long-lasting relationships is also key. As a service sector industry, banks should be relentless in serving their customers with high service standards. Banks should escape from the conventional mindset of a transacting institution, but embark on a more advisory and empowering role to its customers. In an era where banking relationships are increasingly maintained via digital channels, it is important that banks preserve the human element of their relationships with customers for long-lasting relationships, whilst developing the digital means.

Furthermore, maintaining a quality portfolio amidst rapid expansion is yet another challenge for banks. Banks should act wisely in risk profiling, screening and evaluation of customers as well as in monitoring and follow-ups. Banks should be proactive in identifying early warning signals of stressed customers which may result from intrinsic causes or macroeconomic factors, thereby avert potential losses.

 
Focusing on the shareholder, what efforts and initiatives are you taking to drive shareholder value? 
As was explained earlier, we are well strategized to improve the bank’s profitability sustainably. We are guided by a board approved dividend policy, whereby we reward our shareholders with a healthy payout whilst retaining adequate capital to strengthen the growth of the franchise. 
We also ensure that we publish timely and relevant information with the highest level of clarity and transparency, facilitating them to make sound investment decisions. Our well-structured investor relations initiatives ensure the dissemination of such information.
Furthermore, we firmly base all our operations on a robust corporate governance framework, which ensures that the institution, in which our shareholders have placed their wealth in, is well governed. This is further supported by a sound risk management framework, which ensures the sustainability and perpetuity of the franchise.

How has listing on the CSE been beneficial to NDB? 
NDB was listed in the CSE in 1993. Since then to date, the CSE has assisted NDB tremendously in its growth journey. Presence in the CSE has linked NDB with quality investors from Sri Lanka as well as overseas. Funds raised via IPOs and listed debentures at the CSE have boosted the bank’s business growth.

Through listing our shares and debentures in the CSE, we have broad based our share and debenture ownership, thereby paving opportunity for the wider community of the Sri Lankan individuals and institutions alike, to become an integral part of NDB’s banking service to the nation’s development.
As one of the high-cap listed entities and also as an entity featured in CSE S&P SL 20 index, NDB has gained wide positive publicity amongst the local and global investors. Our brand image has also benefitted by being listed on the CSE. We have been able to recognize and reward our employees via employee share option schemes by being part of the CSE. 

Furthermore, the adherence to the Corporate Governance Code issued by the CSE jointly with the ICASL has largely contributed to enhancing our sound and transparent corporate governance practices, reporting and disclosures of the bank. 

Finally, what is your message to the shareholders of NDB and also touch on the investment case for the company?
As we place great value in maintaining open and interactive dialogue with our shareholders, NDB maintains a dedicated investor relations function, credentials of which has earned us various recognition amongst other awards, at the CFA Sri Lanka Capital Market Awards.

NDB is a renowned institution in the country which enjoys many distinctions such as a robust corporate governance framework, a highly skilled and experienced workforce and competencies in all fronts of business lines of retail and SME, corporate, project and microfinancing to name  a few.

NDB has entered an exciting phase in its journey. We can assure our shareholders that your organisation will deliver best results for your valued investments with us. We also thank our shareholders for the trust and confidence they have placed in us and for being with us throughout our journey spanning nearly four decades. 

National Development Bank Director/CEO Dimantha Seneviratne