‘NSB continued to prove its resiliency within economic shudder’

Rs. 1.7 Tn Asset base

Rs. 1 Tn investment base

Rs. 1.5 Tn Deposit base

Impaired Loans (Stage 3) Ratio 2.41% (net of stage 3 impairment)

Gross Income raised by 33% YoY

The year 2023 was another challenging year for almost all the sectors of the economy specially the banking sector. Grappling with aftermath of pandemic followed by largest economic crisis in post-independence history, and socio-political uncertainties and monetary tightening, National Savings Bank including all the other banks faced their toughest financial year.

Being a licensed specialized bank with limited financial market opportunities, NSB demonstrated its mettle by recording a Profit after Tax (PAT) of Rs. 7.2 billion for the fiscal year ended December 31, 2023, a testament to its adept management and highly skilled workforce.

The Banks’ achievement of Rs. 7.2Bn PAT was mainly surged by 31% increment of Interest Income. The Bank strategically allocated more than 60% of its customer deposits investing in Government Debt Securities capitalizing on the higher interest rates prevalent in 2022. This prudent investment strategy yielded a substantial interest income of Rs. 137.7Bn which was an upswing of 36%. Interest received through Loans and Advances also grew by 36.3%, an increment of Rs. 23.4 Bn.

Net Gain from trading rose up to Rs. 3.7Bn at the group level which was a 206% increase from last year where we recorded a loss from trading. However, NSB was able to turn around the situation with professional due care and commitment, underscoring NSB’s adeptness in capitalizing on market opportunities.

The Bank however, encountered challenges in net fee and commission income, witnessing a 34% decline due to subdued demand for loans and advances amid higher interest rates then prevailed. Fee and Commission Income was mostly contributed from Retail Loans and Corporate Banking. Both lines of business were clogged due to unwholesome micro financial conditions.

Exceeding the growth rate of Interest Income, the Interest Expense of the Bank also increased by 41% year-over-year (YoY). This rise in the cost of funds, particularly from Fixed Deposits which represent the largest portion (81%) of NSB’s deposit base, contributed to a congestion in the positive growth of Net Interest Income due to the lag effect of liability repricing.

Impairment charges of the Bank decreased by 12% on 2023 compared to the same period last year. The Bank closely monitors and considers the impact of economy to business operations and performance.

In terms of Asset Quality, with all the obstacles, NSB has one of the lowest Impaired Loans (Stage 3) Ratio 2.41% (net of stage 3 impairment) compared to the industry rate of 7% at the end of year fiscal year 2023. Further, the Bank maintains above industry impairment coverage ratio of 53.3%.

Personnel and other expenses were increased by 17% and 16% respectively being in consistent with inflationary situations globally. The Bank recorded a PBT of Rs. 4.3 Bn which was a 5% decrease from the last year. Recording deductible temporary difference of Differed Tax there was a credit of Rs. 2.5 Bn to Income Tax Reversal and created differed tax asset. Accordingly, the Bank was able to spot Rs. 7.2 Bn PAT.

Despite the challenges posted by micro financial conditions and moving to low-interest-rate set-up, the Bank was able to grow its deposit base by Rs. 5.8Bn. On the back of 100% ownership of Government of Sri Lanka (GoSL) and the 100% explicit guarantee provided by the GoSL for the money deposited with the Bank and the interest thereof through the National Savings Bank Act, NSB continued to assure the customer confidence on their deposits.

The Bank’s investment portfolio grew by Rs 62.4Bn amidst the low demand for loans and receivables and the Bank’s strategic move to flow its interest earning assets to a most profitable alternative available. As perfectly described earlier these investments in Government Securities could earn Rs. 137.7Bn Interest Income. Surpassing the industry average of Investment to Total Asset Ratio of 35.8%, NSB recorded 62.4% in 2023.

Total Asset base remarked to Rs. 1.7Tn on 2023 showing a markup of 4% compared to last year. The Bank generated 9.36% of ROE and 0.26% of ROA (Before Tax) in 2023.

The Bank maintained highly liquid asset portfolio when compared with the banking industry. Surpassing the minimum requirement of 20%, NSB has 55% of Statutory Liquid Asset Ratio where the industry average is 44.9% at the end of the year 2023. Liquidity Coverage Ratio (All currency) of NSB is 293.7% which is far more than the minimum requirement of 100% at the end of the year 2023.

The Bank is cushioned adequately to cover potential losses to protect the interests of the Bank’s depositors and other lenders. Accordingly, NSB marked well above regulatory minimum in terms of Capital Adequacy Ratios. The Banks’ Common Equity Tire 1 Capital Ratio was 15.3% at the end of 2023 (minimum requirement -7%) where industry score was 13.4%. Tier 1 Capital Ratio of NSB was 16.9% (minimum requirement – 8.5%) where industry score was 13.8% at the end of 2023. Total Capital Adequacy Ratio of NSB at the end of 2023 was 19.3% where the industry marked it to 16.9%.

As such, NSB continued to stamp its position as “Safest Bank in Sri Lanka” in every aspect such as liquidity, balance sheet management, performance and credit and market risk management. The Lanka Rating Agency (LRA) has assigned the Bank with the issuer rating of [SL] AAA with Stable Outlook. The Bank has been awarded the 6th most valuable brand in Sri Lanka by the Brand Finance Lanka Ltd on 2023. NSB also ranked among the Top 10 Women Friendly Workplaces in Sri Lanka for third consecutive year on 2023.

(NSB)