Sri Lanka’s NDB down 6.8-pct in June
ECONOMYNEXT – Profits at Sri Lanka’s National Development Bank fell 6.8 percent from a year earlier to Rs535 million in the June 2016 quarter amid higher loan loss provisions and rising interest rates, interim accounts show.
The group reported earnings of Rs3.24 per share for the quarter. In the six months to June, it reported earnings of Rs6.56 per share on total profits of Rs1.04 billion, which were down 25 percent.
Interest income grew 34 percent to Rs6.9 billion in the quarter, and interest expense grew at a faster 43 percent to Rs4.7 billion, allowing net interest income to grow at a slower 19 percent to Rs2.1 billion. Interbank borrowings were up 59 percent to Rs18.4 billion.
Sri Lanka had two bad budgets in 2015, and the Central Bank initially released liquidity and printed money to trigger unsustainable credit, and generated a balance of payments crisis and a currency collapse, but interest rates are now correcting to match fiscal excesses.
Loans grew 5 percent to Rs220 billion in the six months to June, while deposits grew at a slower 3 percent to Rs190 billion.
Customer loans were up 21 percent from a year earlier and deposits rose 12 percent to Rs169 billion.
Loans loss provisions for the quarter rose 18 percent to Rs281 million.
The bank said during the first six months to June, general provisions were made on a prudent policy as loans grew fast over the past pear.
"In the six months to June, Rs438 million of specific provisions were made ‘for a few customers made on sound judgement and objective evidence," the bank said in a statement. (Colombo/Aug12/2016 – Corrected profits in June quarter down 6.8 percent)