NDB commences 2021 on a positive note
Deposits base touches Rs. 500 b
Cost to income ratio significantly improves to 30.9%
Profit before all taxes increases by 19% to Rs. 3.5 b
Post-tax profitability increases by 34% to Rs. 2.3 b
National Development Bank (NDB) stated that its operating income posted a growth of 23% to Rs. 8.2 billion, supported by enhanced net interest income (NII), fee income, and other non-fund income bases. Although interest income dipped by 8%, this was more than offset by a larger dip in interest expenses of 20%, leading to a NII growth of 18% to Rs. 5.1 billion. This also led to a net interest margin of 3.29% compared to 3.07% in 2020. Driving NIMs was the CASA base of Rs. 129 billion in Q1 2021 growing by 58% over Q1 2020 (quantum of growth – Rs. 47 billion), which also raised the CASA ratio from 20% to 26%. Fee and commission income grew 29% to Rs. 1.3 billion. Net gains and trading also posted a record increase of 116% over Q1 2020 to Rs. 460 million, reflecting the forex income gained during the quarter.
Impairment charges for loans and other losses for Q1 2021 was Rs. 2.2 billion, an increase of 70% YoY. The regulatory gross non-performing loan (NPL) ratio for Q1 2021 was 5.40% (2020: 5.35%) reflecting the wider industry NPL behavior. The net NPL ratio for the quarter was 2.96% (2020:3.23%).
Total operating expenses stood at Rs. 2.5 billion for Q1 2021, a 4% increase over Q1 2020. Within this, the bank continued to manage a reduction in controllable expenses compared to Q1 2020. The resultant cost to income ratio for the quarter was 30.9%.
Accordingly, operating profit before all taxes for the period was Rs. 3.5 billion, an increase of 19%. Total taxes for the period was Rs. 1.1 billion, comprising VAT on financial services and income tax, with income tax rate reducing to 24% from 28%. The resultant effective tax rate for Q1 2021 was 33%.
Post-tax profitability enhanced to Rs. 2.3 billion, with a growth of 34% whilst profit attributable to shareholders was Rs. 2.4 billion, up by 90%.