NDB total operating income up by 38% to Rs. 43 Bn
National Development Bank PLC (NDB/ the Bank) released its financial statements for the financial year ended December 31, 2022 with total operating income increasing by 38% to LKRs. 43 billion.
Bank’s Director/ CEO Dimantha Seneviratne, stated that 2022 was notable for the never-before seen challenges affecting the Sri Lankan economy, from both domestic and international fronts. “Whilst factors beyond the control of the Bank and the industry collectively continued to dampen profitability, the Bank generated sound operational results, as reflected in a 77% growth in gross income, 38% growth in total operating income and a vastly improved cost to income ratio across the industry at 27% due to cost management initiatives, which affirm the strength and stability of NDB’s foundation and the agility of the NDB Team.”
NDB recorded a profit attributable to shareholders of LKR 3.0 Bn at the Group level, whilst post and pre-tax profits at the Bank level closed in at LKR 2.9 Bn and LKR 2 Bn for the financial year 2022. Compared to 2021, these were negative growth rates of 56%, 54% and 80% respectively,
the continuation of year-long and industry-wide profit deceleration attributable to the macro-economic shocks that severely impacted the banking sector, including large impairments.
Notwithstanding the challenges, the Bank demonstrated strength in core banking operations with total operating income, comprising fund and fee based income increasing by 38% YoY to LKR 42.7 Bn in 2022. Net interest income, the majority contributor in operating income enhanced by 42% over the prior year, to LKR 30.7 Bn. Interest income of LKR 97.9 Bn which increased by 86% and interest expenses of LKR 67.2 Bn which increased by 116% drove NII, together with a Net Interest Margin (NIM) of 4.00%.
Triggered by the highest-ever increase in regulator policy rates within a 12 months window, where the Standing Deposits Facility Rate and Standing Lending Facility Rate were increased by 950 bps to 14.5% and 15.5% respectively, all benchmark interest rates moved exponentially high in 2022. Interest rates within NDB moved in tandem, with timely re-pricing of the loan book and deposits mobilization at prevailing market rates.
The Bank also experienced aggressive appetite in customers for time deposits, including the shifting of existing low cost deposits to time deposits to capitalize on the historically high deposit rates. This explains the larger increase in interest expenses. Amidst such conditions, effective assets and liability management supported the Bank in enhancing its NIM to 4.00% from 3.25% in 2021.