The NDB Group’s operating profits for the quarter ended 31 March 2010 grew significantly by 60% over the fourth quarter of 2009. The financial conglomerate’s improved performance further substantiates the stability of the NDB Group.

The net income of Rs. 1.6 b (Net interest income, fee income and equity income) of the NDB Group for the quarter compares well with Rs. 1.5 b for the fourth quarter of 2009 (an increase of 10%). The profit before tax for the quarter has remained on par with the fourth quarter of 2009. The profit before tax for the period excluding the exceptional gains on government securities increased by 6% over the corresponding period last year.

NDB Bank’s core banking revenue of Rs. 1.4 b (net interest income, fee and forex income) for the quarter compares favourably with Rs. 1.2 b for the previous quarter (an increase of 12%). The profit before tax for the quarter also increased by 28% over the previous quarter. The Bank’s lending portfolio as at 31 March 2010 increased by 5% over 31 March 2009 and by 3% over the last year end. The increase in the gross lending portfolio of 3% over the last year end compares satisfactorily with the industry growth of 4%. As part of the post conflict development phase in the country, NDB Bank actively partnered ventures in the SME sector. This was clearly reflected in the high disbursements under the SME Regional Development Projects amongst others.

The Bank’s customer deposit portfolio also increased by 45% over that as at 31 March 2009 and was on par as compared with the portfolio as at 31 December 2009. The improved conditions in the share market during the first quarter of 2010 resulted in a shift in Bank deposits to stock market investments. NDB Bank’s Tier 1 Capital Adequacy Ratio of 13.49% and a Tier 1 & 2 ratio of 15.86% are well in excess of the regulatory minimum of 5% and 10% respectively.

Non Performing Loans
The Bank’s stringent policies in maintaining the quality of its loan book resulted in the ratio of Non Performing Loans (NPLs) to the gross lending portfolio improving from 2.58% as at 31 December 2009 to 2.43% as at 31 March 2010. It should be noted that NDB Bank’s NPL ratio remains one of the lowest in the local banking industry, and compares very favorably with the industry NPL ratio of 8.0% as at 31 March 2010.

Operating Costs
The operating costs of the Bank increased by 15% over the corresponding period last year. The Bank increased its branch network from 40 to 45 during the last quarter of 2009 and during the first two months of 2010, which mainly contributed to the increase in overhead costs over the corresponding period last year. The Bank’s cost to income ratio of 47% for the period compares favourably with the industry ratio of 50%.

Contributing towards the economic development of the country
NDB Bank, with its proven track record of knowledge and expertise in project financing has played a key role in the setting up of several commercially viable development related projects, for more than 30 years. With the business / investor confidence levels building up gradually, since the end of the long drawn out war, there is an immediate need for substantial investments in development/ infrastructure related projects. Riding on this positive sentiment, NDB Bank has geared itself to seek such opportunities that are emerging not only in the North and East but also across the rest of the country with a view to participating in financing them. In line with this strategy, NDB Bank has already financed some of the key private sector development projects in the first quarter of 2010. Moreover, the Bank is presently in the process of negotiating several deals for financing development related industrial projects with the private sector in fields such as energy/ power, telecom, tourism and manufacturing etc.

Expansion and growth
As part of its strategy to expand the branch network, NDB Bank has opened a total of 5 branches in the North and East during the last two quarters, the most recent addition being the Vavuniya branch. By establishing branches in the Northern and Eastern Provinces, a wide-ranging portfolio of financial solutions are offered to the people and business entities in these regions. NDB Bank is firmly of the view that retail banking and small and medium scale enterprises (SMEs) play a fundamental role in the development of a country. The Bank’s range of Retail Banking products from personal loans to housing and education loans are aimed at improving the lifestyles of the people. SMEs have always been an important aspect of NDB Bank's portfolio. They now take on an even more important dimension, given the emerging post war economic opportunities and the developments in the Northern and Eastern provinces.

Empowering people in the North and East
NDB Bank has set up the IDP Empowerment Trust in line with the Bank’s strategic CSR focus, namely Education and Entrepreneurship. NDB Bank partnered with the Vocational Training Authority (VTA) which comes under the Ministry of Vocational and Technical Training to facilitate several vocational training programmes for IDPs such as tailoring, carpentry, masonry, plumbing, electrical and welding. As the initial phase of this project, the Bank has donated 250 tool kits in Vavuniya in the first quarter 2010, to those persons who completed the training courses conducted by the VTA. This programme will enable the trainees to rebuild their lives and reconstruct their livelihoods for a better tomorrow; thereby giving them the opportunity to take part in the reconstruction and economic recovery that is taking place. The main objective of the IDP Empowerment Trust is to provide necessary tool kits to those IDPs who complete the vocational training programme to improve their livelihoods.

AVIVA NDB Insurance
Eagle Insurance has transformed into AVIVA NDB Insurance creating a milestone in the history of insurance in Sri Lanka. Since February 2006, AVIVA and NDB have been the main shareholders of former Eagle Insurance with 51% and 41.14% holding respectively. This transformation revitalizes the entity with the combined strengths of its major shareholders, AVIVA and NDB coming strongly into focus. The farsighted strategy is designed to benefit customers with the worldwide expertise of AVIVA and the financial stability of NDB and its commitment to play a pivotal role in insurance.

Diversity, Strength and Stability of the NDB Group
NDB Bank is one of the fastest growing commercial banks in the country with NDB Group having regional operations in Maldives and Bangladesh. As part of the NDB Group, its customers have access to a full range of banking and financial services, including Project and Infrastructure Finance, SME Lending, Retail banking and Corporate banking through NDB Bank; Investment banking, Stockbroking and Wealth management through the Investment Banking Cluster, and Insurance solutions through AVIVA NDB Insurance. The performance of NDB Investment Bank and NDB Stockbrokers for the first quarter of 2010 showed improved performance due to improved market conditions.

In today’s challenging environment, NDB Group has focused on consolidation and maintaining high quality assets, while ensuring stability and a strong balance sheet. This has made the NDB Group one of the well-capitalised financial groups in Sri Lanka, poised for future expansion. Maintaining the highest standards of competence and probity, the NDB Bank is firmly on track to achieve its cherished vision - to be a World Class Sri Lankan Bank.