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Sri Lanka's NDB Bank Dec net up 46-pct with strong loan growth

Feb 15, 2016 07:28 AM GMT+0530 | 0 Comment(s)

ECONOMYNEXT - Profits at Sri Lanka's NDB Bank rose 46 percent to 1,254 million rupees in the December 2015 quarter from a year earlier, helped by high net interest income and fees, amid 20 percent loan growth, interim accounts showed.

The group reported earnings of 7.62 rupees per share. In the year to December it reported earnings of 21.51 rupees on total profits of 3.5 billion rupees, which were down 14 percent.

In the December quarter interest income rose 8.7 percent to 5.7 billion rupees and interest expense rose 9.3 percent to 3.6 billion rupees, but the bank grew net interest income 7.6 percent to 2.1 billion rupees.

During the year NDB Bank grew its loans 20 percent to 209 billion rupees.

The bank said most of the growth came during the second half of the year.

"The performance during the first six months of 2015 was relatively modest, partly due to macro-economic and political conditions that prevailed during this period," the bank told shareholders.

"It is expected that, the benefits of the accelerated growth achieved in the second half of the year will reflect in the financial results in the year 2016."

Loan loss provisions were down to 201 million rupees from 222 million a year earlier with a 181 million specific provision and a small general provision of 13.1 million rupees.

Last year a 177 million provision reversal was off-set by 400 million rupees of prudential general provisions.

Analysts say there is generally a lag in loans turning bad after periods of strong credit growth.

Critics say in Sri Lanka the central bank keeps rates down by printing money, extending periods of strong credit growth into credit bubbles which are also associated with expanding budget deficits.

The bubble triggers currency collapses, sharp spikes in interest rates and an un-necessary 'hard landing' to correct, which then tends to generate bad loans.

The growth was financed with 22 percent gain in deposits to 184 billion rupees.

Financial investments, available for sale grew 60 percent to 28 billion rupees. Financial Investments - held to maturity fell from 10 billion rupees to 5.6 billion.
 


 

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