Business

NDB posts solid performance in H1 2021 amidst the pandemic

Published

5 years ago

2021/08/1

National Development Bank PLC, Sri Lanka’s fourth largest listed bank continued to demonstrate its resilience to external shocks and ability to deliver consistent results, as reflected in financial statements released to the Colombo Stock Exchange for the six months ended 30 June 2021, the bank said in a news release last week.

The review period was marked by month long travel restrictions imposed to curb the spread of the third wave of the pandemic in Sri Lanka which affected business momentum. NDB’s Director and Group CEO Dimantha Seneviratne commented that notwithstanding these deepening challenges, the Bank stayed in top form in delivering uncompromised value to all our stakeholders, thanks to its agile strategies and committed team.

He said the banking sector has always played a crucial role in national economic development, and its importance is more pronounced in a situation like this. With the nation-wide vaccination program successfully rolling out there is expectancy of expedited return to economic normalcy. In such a backdrop, NDB has affirmed its focus in safeguarding the interest of three critical stakeholders, i.e. the customers, the employees and the society at large. This focus has enabled NDB to maintain a sound equilibrium in our performance, for the benefits of all our stakeholders together with a sense of achievement for the team.

Income and profitability

NDB recorded a total operating income of LKR 15.4 Bn which grew by 19% over six months ended June 2020 (YoY). Operating income was strengthened by net interest income (NII), net fee & commission income and consolidated other non-fund based income, all of which recorded a growth over the comparative period, the release explained.

NII, the majority contributor in operating income (67%), grew by 17% to LKR 10 Bn. Reflecting the reduced interest rate environment, both interest income and interest expenses declined YoY with the latter posting a larger decline at 18%. Deposit portfolio’s improving skewness towards CASA base, with over 50% of the fresh deposits growth for H1 2021 over H1 2020 coming from CASA deposits and a significantly improved CASA ratio of 26% (H1 2020: 21%) contributed to reduce interest expenses. CASA base also improved by 54% YoY (LKR 48 Bn). Resultant annualized net interest margin (NIM) for the period was 3.23% (H1 2020 – 3.25%). NIM continues to be under pressure with possible further relief to be granted to customers in loan repayments, due to the cascading effects of the pandemic.

Net fee and commission income grew by an impressive 48% to LKR 2.6 Bn supported by growth in the loan book (YoY 14%), trade business and digital banking transactions conducted through NDB NEOS platforms. All other non-fund based income, including net gains from trading and de-recognition of financial assets collectively grew by 6% to LKR 2.4 Bn., the release said.

Impairment charges for loans and other losses for H1 2021 was LKR 4.2 Bn, an increase of 31% YoY. Provision charges increased in line with the growth in the loan book and provisions made at both collective and individual levels in response to elevated risks caused by the third wave of the pandemic and other stresses. The regulatory gross non-performing loan [NPL] ratio for H1 2021 was 5.63% (2020: 5.35%) reflecting the wider industry NPL behavior. The net NPL ratio for the quarter was 3.37% (2020: 3.23%).

Costs continued to be well managed, benefiting from the Bank’s organization-wide Operational Efficiency and Effectiveness improvement programme (OEE) and strong digital drive. Total operating expenses for H1 2021 was LKR 5.1 Bn, with the YoY increase managed at 10%, amidst business volume growth and a host of other customer-centric initiatives. Gradual increase in deployment of Robotic Process Automations and workflow solutions in internal processes are delivering their investment dividends, with the increase in controllable costs managed at reasonable levels. NDB NEOS digitized platforms undergo continuous upgrades, propelling the uptake of these digital channels over physical banking for our customers. The resultant cost to income ratio for the period was 33%, remaining at the low 30% range.

Operating profit before all taxes for the period was LKR 6.1 Bn, up by 21% YoY. Total taxes for the period was LKR 2.2 Bn, comprising VAT on financial services – which recorded an increase of 16% due to increase in business volumes, and income tax – which reduced by 4% amidst an increase in profits due to the income tax rate reducing to 24% (effective from the prior year) from 28% in the prior year. The effective tax rate for H1 2021 was 36%.

Accordingly, post-tax profitability enhanced to LKR 3.9 Bn, up by 32% whilst profit attributable to shareholders increased to LKR 4.1 Bn, up by a notable 73%. NDB Group’s capital market cluster continued to make valid contribution to the overall Group profitability, benefited by greater opportunities available in the Sri Lankan capital markets.

Balance Sheet Performance

Total assets for H1 2021 was LKR 664 Bn, up by 6% over 2020. On YoY terms this was a growth of 18%. Loan book growth was broad-based, to LKR 487 Bn, a YTD growth of 10% and YoY growth of 14% (quantum of growth – LKR 43.5 Bn and LKR 58.2 Bn respectively), with lending increasing to all segments.

On aspects of funding, the Bank’s deposits base crossed the LKR 500 Bn mark for the first time with deposits closing in at LKR 515 Bn. This was a YTD growth of 5% and YoY growth of 21%, which translated to quantum of LKR 25.0 Bn and LKR 87.7 Bn respectively. CASA deposits grew by 11% YTD (LKR 13 Bn) to LKR 136 Bn.

The period under review booked a total capital infusion of LKR 9.46 Bn, comprising of LKR 8 Bn raised through the Rights Issue and LKR 1.46 Bn, raised through the Private Placement with Norfund – the Norwegian Investment Fund for developing countries, strengthening Tier I equity capital of the Bank. NDB also secured USD 75 Mn from the Development Finance Corporation of the USA as a long term funding line towards lending to SMEs and infrastructure development of the country.

Key performance ratios

Return on equity of the Bank for H1 2021 increased to 13.81% (2020: 13.13%) whilst the same at the Group level was 13.91% (2020: 11.20%). Pre-tax ROA of the Bank was 1.68% (2020: 1.59%) and of the Group was 1.79% (2020: 1.58%). Earnings per share of the Bank was LKR 28.89 (2020: LKR 23.77), whilst the same for the Group was LKR 30.96 (2020: LKR 21.99).

The net asset value per share of the Bank and the Group were LKR 161.48 and LKR 170.94. On capital adequacy, Tier I capital adequacy ratio and Total capital adequacy ratio of the Bank were 10.43% and 14.73% respectively. The same ratios for the Group were 10.83% and 15.03%. Liquidity coverage ratio – Rupee, Liquidity coverage ratio – All currency and Net Stable Funding Ratio were 204.01%, 184.31% and 116.81% respectively. All these ratios were well above the regulator stipulated minimum requirement levels, with capital adequacy ratios having enhanced post Tier I capital infusion as explained above – reflecting the strength, stability and sufficient liquidity of the Bank.

Support extended to COVID-19 affected customers and other aspects of performance

The Bank’s support to its pandemic hit customers to emerge strong continues, with various moratoria and concessions, together with strong advisory support from our relationship managers, including the “NDB Jayagamu Sri Lanka” proposition. NDB continued its digital drive unabated by the pandemic. Enabling CRIB report and CRIB score downloads in the NEOS mobile app and commencing the development of video -Know-Your-Customer (vKYC) which will take virtual banking to a new level using AI, are two of the “first in the industry” launches by NDB. “NDB Cares”, NDB’s structured response in support of employees and the society at large under the theme “Together with Humanity…Stronger with Positivity” continued its mission, which included donations to the healthcare sector and communities in need, amongst other initiatives.

Way forward

With the completion of Tier I capital infusion netting LKR 9.5 Bn, and further funds secured through credit lines, NDB is poised for accelerated growth as market opportunities warrant. This growth will be in alignment with the Bank’s own strategic aspirations as well as the country’s broader needs to propel economic prosperity, which include the SME sector, thereby fortifying NDB’s role as a key contributor in the nation’s development journey.

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Business

Indian export delegation engages with Sri Lankan businesses and SMEs at Ceylon Chamber B2B session

Published

22 hours ago

2026/07/15

Sahan Weerasooriya

Deputy Director FIEO with the Secretary General-CEO of the Ceylon Chamber

The Ceylon Chamber of Commerce hosted a Business-to-Business (B2B) and networking session for a 31-member business delegation from the Federation of Indian Export Organisations (FIEO), India’s apex export promotion organisation, during its visit to Sri Lanka from 8–10 July 2026.

The delegation comprised small and medium enterprises from sectors including pharmaceuticals, engineering goods, apparel and textiles, food and agricultural products, and infrastructure. The session was organised by the Ceylon Chamber in collaboration with the Indo Lanka Chamber of Commerce and Industry (ILCCI), established under the Ceylon Chamber’s network to promote business engagement between Sri Lanka and India.

The engagement provided a platform for participating Indian and Sri Lankan companies to connect directly, exchange market insights, and explore potential opportunities for trade, partnerships, and business collaboration across multiple sectors. Discussions focused on identifying areas of mutual interest, including sourcing opportunities, market expansion, and potential commercial linkages.

The participation of Indian SMEs from diverse industries highlighted the growing interest among exporters to explore Sri Lanka as a market and regional business partner. For Sri Lankan companies, including SMEs, the engagement provided an opportunity to connect directly with Indian businesses and identify potential avenues for expanding trade relationships.

The Ceylon Chamber, through its network and market access initiatives, continues to support businesses by creating opportunities for direct engagement with international counterparts, helping companies identify new markets, partners, and commercial possibilities.

Business

2.4 tons of marine debris removed from Trincomalee

Published

22 hours ago

2026/07/15

Sahan Weerasooriya

Historic moment: The World Ocean Day cleanup team

A massive underwater cleanup operation to mark World Ocean Day has removed nearly 2.4 tonnes of marine debris from the seabed of Trincomalee’s Dutch Bay, highlighting both the growing threat of marine pollution and the power of collective action in safeguarding Sri Lanka’s rich coastal ecosystems.

The National Underwater Cleanup Initiative, organised by Clean Ocean Force in partnership with the Marine Environment Protection Authority (MEPA), NDB Bank, and the Earthlanka Youth Network, brought together six professional dive centres, the Sri Lanka Police Life Saving Unit – Trincomalee Dive Team, and scores of volunteer divers in one of the country’s largest coordinated underwater conservation efforts.

The cleanup, held recently, saw teams carrying out multiple dives throughout the day to retrieve a wide range of waste that had accumulated beneath the surface. Divers recovered plastic waste, rubber gloves, discarded clothing, fishing-related debris and other mixed refuse scattered across the seabed.

Organisers said the underwater environment had suffered considerable damage following Cyclone Ditwa, with large volumes of debris deposited across Dutch Bay, posing serious threats to marine life, coral habitats and the wider coastal ecosystem.

The initiative mobilised divers from Scuba Diving Sri Lanka, Kalpitiya Diving Centre, the Sri Lanka Police Life Saving Unit – Trincomalee Dive Team, Pigeon Island Diving Centre, Sri Lanka Diving Tours, Weligama Bay Dive Centre, Blue Deep Diving Centre, and Blue Water Diving Centre.

Working shoulder to shoulder with volunteer divers and marine conservationists, the Sri Lanka Police Life Saving Unit – Trincomalee Dive Team played a pivotal role in ensuring the success of the operation. Their professionalism, underwater rescue expertise and commitment to environmental stewardship significantly strengthened the large-scale cleanup effort, enabling teams to safely recover nearly 2.4 tonnes of marine debris from the seabed.

Chairman and Co-founder of Clean Ocean Force, Jerome Fernando, said the real condition of the oceans often remained hidden beneath the surface.

“The true health of our oceans lies beneath the surface. Every kilogram of waste removed from the seabed helps protect marine biodiversity and preserve our oceans for future generations. This initiative highlights the power of collaboration, and we thank all partners and volunteers who contributed to this effort. Together, we can create a cleaner and healthier ocean for Sri Lanka, he said.

Sudarsha De Silva, a long-standing participant in the programme, said the Trincomalee cleanup had now become a significant annual conservation event.

“This unique initiative is taking place for the third consecutive year in Trincomalee. Under the leadership of Clean Ocean Force, we have proudly participated over the past three years to celebrate World Ocean Day. We sincerely thank Clean Ocean Force for initiating this annual programme, he said.

By Ifham Nizam

Business

LOLC Al-Falaah launches Sri Lanka’s first structured Tawarruq-based personal finance solution

Published

22 hours ago

2026/07/15

Sahan Weerasooriya

Ash-Shaikh Shafique A. Jakhura (Mufti), Chairman / Shiraz Refai, Head of Al-Falaah

Further strengthening its position as Sri Lanka’s leading alternate financial services provider, LOLC Al-Falaah has introduced “Al-Falaah Tawarruq for Personal Finance,” the country’s first structured Tawarruq-based Islamic liquidity solution. The launch marks a significant milestone in the evolution of Sri Lanka’s Islamic finance landscape, offering customers a practical and ethically grounded avenue to access liquidity.

Developed in response to the growing demand for alternate financial solutions, Al-Falaah’s Tawarruq for personal finance provides a structured, transparent, and accessible mechanism for customers to obtain liquidity while remaining aligned with Islamic economic principles. The solution is designed to support a wide range of financial needs, including education, healthcare, business expansion, personal commitments, and other essential expenditures.

Tawarruq is a globally recognised concept that enables customers to access liquidity through a series of asset-based transactions. Under this arrangement, a commodity is purchased on deferred payment through a Murabaha (cost-plus-profit sale) agreement and subsequently sold to a third party on a spot cash basis, generating liquidity in a manner compliant with Murabaha principles.

LOLC Al-Falaah acts as the appointed agent throughout the transaction process, facilitating the purchase, sale, and resale of commodities on behalf of the customer. This ensures a seamless, transparent, and efficient experience while maintaining strict adherence to underlying product principles.

The introduction of this pioneering solution comes at a time when customers are increasingly seeking financial products that combine flexibility, transparency, and ethical responsibility. By formalising and institutionalising the Tawarruq structure within Sri Lanka’s financial sector, LOLC Al-Falaah is expanding access to faith-based financial solutions while elevating industry standards.

Commenting on the launch, Shiraz Refai, Head of Alternate Financial Services at LOLC Al-Falaah, stated, “At LOLC Al-Falaah, our commitment is to provide customer-centric and future-ready solutions that empower individuals and businesses to achieve their aspirations with confidence. The introduction of Sri Lanka’s first structured Tawarruq liquidity solution represents an important step in expanding access to ethical finance while reinforcing trust in alternate financial services. Designed with transparency, convenience, and compliance at its core, this solution offers customers a practical pathway to meet their evolving financial needs.”

Sharing his views, Ash Shaikh Shafique A. Jakhura, representing the Scholar Supervisory Board, stated, “Al-Falaah Tawarruq for Personal Finance solution reflects the ability of Islamic finance to address contemporary financial requirements while remaining firmly rooted in its foundational principles. Developed with a strong emphasis on transparency, fairness, and authenticity, the solution provides a contractual framework that responds effectively to real-world liquidity needs. It also demonstrates the adaptability of Islamic finance in delivering relevant and impactful solutions within today’s dynamic financial environment.”