National Development Bank PLC (NDB) has posted a strong nine-month result for the period ended September 30, 2009, with profit attributable to shareholders up a significant 50% over the comparative period last year, the bank’s Chairman, Mr. P.M. Nagahawatte, has reported in an interim statement.

"The profit after tax and the profit before tax also increased significantly by 41% and 48% respectively over the corresponding period last year. Both, the profit before tax and the profit after tax for the NDB Bank increased by 56% over the corresponding period last year," he said in his review.

NDB has taken pride about the quality of its loan book thanks to prudent policies saying its non-performing loan ratio remains one of the lowest in the local banking industry.

During the period under review, the NPL ratio to the gross lending portfolio had increased slightly to 3.1% from 2.3% as at December 31, 2008.

"It should, however be noted that NDB Bank’s NPL ratio remains one of the lowest in the local banking industry, where the average ratio was 8.8%," Nagahawatte noted.

During the review period, the banks core banking revenue comprising net interest income and other income was up 35% from a year earlier with a surge in gains from trading in government securities up to Rs.708 million from Rs.58 million in the comparative period the previous year.

Customer deposits too were up 39% on December 31, 2008 strengthening the balance sheet.

"NDB Bank remains the most well-capitalized bank among local commercial banks with a Tier 1 Capital Adequacy Ratio of 13.63% and a Tier 1 & 2 ratio of 16.37%, which is well in excess of the regulatory minimum of 10%," the chairman said.

The period under review had seen overheads up by 10% but in line with budget. While effective cost reduction methods have been adopted, the chairman said with new branches being opened in the North and East, overheads are expected to increase further during the rest of the year.

The bank expanded its branch network to Jaffna, Batticaloa and Ampara with operations due to begin soon in Trincomalee and Vavuniya, Nagahawatte said.

"NDB Bank’s investment in these new branches will provide the much needed access to finance for both small and medium enterprises and consumers alike in these areas. With these branches the bank offers communities in the Northern and Eastern Provinces a wide-ranging portfolio of financial solutions in retail banking, corporate banking and SME, maintaining the highest standards of service and quality," he said.

NDB’s Fitch rating of AA(lka) is among the best in the industry reflecting its strong financial profile in terms of capital base, profitability and asset quality, Nagahawatte pointed out.

The group has focused on consolidation and maintaining high asset quality, ensuring stability and a strong balance sheet making the group "one of the well capitalized financial groups in Sri Lanka, poised for future expansion," the chairman said.

The bank’s net profit attributable to shareholders was nearly Rs.1.4 billion during the nine months under review, up 56% from Rs.894.5 million a year earlier with net interest income growing 24% to over Rs.2.8 billion.

Foreign exchange income was down 14% to Rs.394.2 million from a year earlier but equity income from quoted and non-quoted securities had more than doubled to Rs.305.9 million as had other income, up 127% to nearly Rs.1.2 billion.

Group profit attributable to shareholders at Rs.1.6 billion was up 50% from the comparative figure a year earlier.

NDB has a stated capital of slightly over Rs.1 billion, a statutory reserve of Rs.818.5 million and revenue reserves of nearly Rs.9 billion.

The Bank of Ceylon and Jaya Investments with 10% each of the NDB are the bank’s biggest shareholders followed by the Galleon Diversified Fund of Mr. Raj Rajaratnam owning 5.82% as at September 30, 2009 and Dr. S. Yaddehige with 5.17%. The General Fund of the Sri Lanka Insurance Corporation (SLIC) (4.64%) and the EPF (4.60%) together with Life Fund of SLIC and the ETF are also among the top 20 shareholders.