National Development Bank PLC (NDB) recorded a post-tax profit of Rs 3.01 billion during the second quarter of 2026 (1 April to June 30) – in the first full quarter since its reporting of the Rs 13.2 billion fraud in April, according to a disclosure made to the Colombo Stock Exchange on Wednesday (22).
The bank reported an operating profit before taxes on financial services of Rs 9.50 billion for 1H 2026, after recognising the gross financial impact of the fraud attributable to the period amounting to Rs 2.55 billion, which related entirely to the quarter ended 31 March 2026. This compares with an operating profit before taxes on financial services of Rs 4.38 billion for 1H 2025, which has been restated to reflect the applicable fraud impact of Rs 4.26 billion recognised for that period.
Post-tax profit for 1H 2026 amounted to Rs 4.83 billion, compared with a restated post-tax profit of Rs 1.93 billion for 1H 2025, with the net financial impact of the fraud reflected in both periods. Excluding the impact of the fraud, post-tax profit for 1H 2026 would have been Rs 6.21 billion, compared with Rs 4.22 billion in the corresponding period of 2025.
The bank continued to deliver a strong income performance during the period under review, generating total operating income of Rs 25.13 billion, representing a year-on-year (YoY) growth of 12.7% over 1H 2025. This growth was driven entirely by the bank’s core banking operations and is presented before taking into account any financial impact arising from the fraud incident.
Supporting this performance, total revenue increased by 12.8% YoY to Rs 53.82 billion. Net interest income (NII) grew by 2.8% YoY to Rs 17.42 billion, supported by prudent balance sheet management, disciplined pricing strategies, and effective asset and liability management. Interest income increased by 8.4% to Rs 45.86 billion, while interest expense rose by 12.1% to Rs 28.44 billion. Against the backdrop of the prevailing interest rate environment, the bank’s timely re-pricing of both loan and deposit portfolios helped sustain margin performance, resulting in a net interest margin (NIM) of 3.8%, compared with 4.1% for FY 2025.
Net fee and commission income continued to be a key contributor to revenue diversification, increasing by 22.4% YoY to Rs 4.45 billion, driven primarily by credit, cards, operations and trade-related activities. Other non-fund-based income, comprising gains from trading activities, financial assets measured at fair value through profit or loss, derecognition of financial assets, and other operating income, amounted to Rs 3.26 billion during 1H 2026. Within other operating income, foreign reserve revaluation gains netted Rs 1.21 billion, and compared with a Rs 362.37 million in 1H 2025.
Impairment charges on loans and other investments declined to Rs 3.46 billion, representing a significant 22.9% YoY reduction. Loan impairment charges decreased by 18.7%, reflecting the benefits of the bank’s continued focus on asset quality management, enhanced credit underwriting standards, closer monitoring of asset quality and stage migration trends, and strengthened recovery efforts. The impaired loans (Stage 3) – Net ratio improved to 3.3% as at 30 June, 2026 from 3.8% at end-2025, while Stage 3 provision coverage improved further to 62.9% from 59.1%.
Total operating expenses amounted to Rs 12.18 billion for the period under review, including Rs 2.55 billion recognised under other operating expenses in relation to the fraud. The comparative operating expense for 1H 2025, adjusted for the fraud-related expense applicable to that period was Rs 13.44 billion.
Following the discovery of the fraud within the bank, several announcements were made to the Colombo Stock Exchange on 2, 6 and 23 April 2026 to keep stakeholders informed of developments. As per the latest update, issued on 26 June 2026, the bank received the Interim Report from Deloitte Touche Tohmatsu India LLP (Deloitte), which had been commissioned by the Board of Directors to conduct an independent forensic review of the facts and circumstances surrounding the fraud. Based on Deloitte’s examination conducted thus far, the value of the suspicious transactions identified amounts to Rs 13.58 billion, versus the initial estimate of Rs 13.20 billion.
The bank has restated its financial statements, including comparative information for prior periods, to reflect the impact of this revised amount of Rs 13.58 billion as follows: Rs 1.42 billion to periods prior to 1 January 2025, Rs 9.62 billion to the financial year ended 31 December 2025, and Rs 2.55 billion to the quarter ended 31 March 2026. Accordingly, the Statement of Profit or Loss for the comparative period ended 30 June 2025 and the Statements of Financial Position as at 1 January 2025 and 31 December 2025 have been restated.