Sri Lanka’s NDB profits grow in Dec on lower income tax

ECONOMYNEXT- Sri Lanka’s NDB Bank said net profits for the December quarter grew 3.8 percent from a year earlier to 1.8 billion rupees on a lower income tax charge.

NDB Bank in its interim financials reported 8.29 rupees in earnings per share for the quarter. For the 2019 year, the bank earned 21.53 rupees a share. The NDB share closed at 94.8 rupees on Tuesday.

Gross income for the quarter grew 5.8 percent to 15.7 billion rupees.

Interest income grew 9.5 percent to 13.8 billion rupees while interest expenses grew 8.3 percent to 9.1 billion rupees, leading to net interest income rising at a faster 9.9 percent to 4.7 billion rupees.

Provisioning for bad loans grew 36.2 percent to 1.4 billion rupees. Bad loans grew to 4.77 percent from 2.85 percent from a year earlier, but contained from 4.93 percent in September.

The group loan book grew 15 percent to 396.7 billion rupees from a year earlier, mainly on term loans. NDB has been relieved of its pressure to raise more capital, as the central bank revamped the domestic systemically important bank (D-SIB) category, which carries higher capital requirements, in December.

NDB was nearing D-SIB status, which earlier was determined when a bank expanded its balance sheet above 500 billion rupees.

Meanwhile, NDB’s deposit base grew 17 percent to 404.7 billion rupees during the quarter.

Net fee and commission income grew 32.6 percent to 1.4 billion rupees.

Profits before income tax had fallen 7 percent to 1.97 billion rupees, mainly due to bad loan provisioning.

The group income tax fell 78 percent to 62.4 million rupees, partially due to NDB accounting for a reversal of taxation on SLDBs.

The government has exempted tax on interest income for SLDBs with effect from April 1, 2018.

The group asset base grew 12 percent to 535.6 billion rupees, while net assets grew 11 percent to 43.38 billion rupees.

NDB group’s tier 1 capital ratio fell to 10.15 percent from 10.39 percent against a minimum requirement of 8.5 percent.

The total capital ratio grew to 14.20 percent from 13.62 percent against a required 12.5 percent.

Return on equity fell to 11.59 percent from 14.26 percent, while return on assets fell to 0.94 percent from 1.18 percent. (Colombo/Feb19/2020)