NDB - Spreading Wings

Sri Lanka’s NDB Bank to spread tentacles to India, Gulf

Nov 09, 2011 (LBT)-Sri Lanka’s NDB Bank, hot on the heels of the tie up with DBS Bank of Singapore, will move to the region where tie ups will be formed for capital market development and a host of other products said the bank Chairman Hemaka Amarasuriya.

“We are currently negotiating with other banks in India and the Gulf where we will have a series of Joint Business Alliances with those banks where we will be bringing in funds for investments in Initial Public Offerings as well, he told to LBT.

We will also be creating loan syndicates and joint ventures for industries as well and where there will not be further investments abroad but what we will be having will be the networks through the corresponding banks in those countries, while we create connectivity through with customers, Amarasuriya said.

One of the foremost priorities of the bank’s local operations will be to reach the initial landmark of 100 branches in the fastest possible time, he said.

http://www.lankabusinesstoday.com/news/business/690-spreading-wings

NDB Bank to spread tentacles to India, Gulf
Immediate target is to grow to 100 local branches says Chairman
November 8, 2011, 10:08 pm

By Ravi Ladduwahetty
http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=38681

NDB Bank, hot on the heels of the tie-up with DBS Bank of Singapore, will move to the region where synergies will be created for capital market development and a host of other products.

"We are currently negotiating with other banks in India and the Gulf where we will have a series of Joint Business Alliances. We will be bringing in funds for investments in Initial Public Offerings as well," NDB Bank Chairman Hemaka Amarasuriya told The Island Financial Review yesterday.

"We will also be creating loan syndicates and joint ventures for industries as well," Amarasuriya said.

One of the foremost priorities of the bank’s local operations will be to reach the initial landmark of 100 branches in the fastest possible time, he said.

Meanwhile, a Research Report compiled by Asia Securities said: "Sri Lanka’s National Development Bank with a branch network of 51 as at June 2011, and an asset base of LKR 124.7 billion (as at 30th June 2011) is the fifth largest private Commercial Bank in Sri Lanka in terms of asset base.

Interest income, has shown a compound average growth of 12 percent over a period of 6 years. A detailed analysis on quarterly performance for FY2010 would reveal overall interest income has declined due to continued dip in interest income earned on other interest earning assets.

During FY2010, interest expenses have declined by 23 percent due to declining deposit rates. But with reference to latest quarterly results (2QFY11) both interest expenses on deposits and interest expenses on other interest bearing liabilities have marginally increased by 5 percent Quarter On Quarter (QOQ) and 5.8 percent QoQ respectively.

Despite fluctuations in lending and deposit rates, bank has maintained a Compound annual growth rate (CAGR) of 8 percent in net interest income over a period of 6 years.

Other income is mainly derived through gains from investments held for trading which is comprised of quoted and non quoted securities and government T bills. In addition to the above, a significant portion of other income is earned as commission and fees. By the end of FY2010, the other income increased by 9 percent.

During FY2010, there was a reversal in the loan loss provision of LKR172. mn as compared with a provision of LKR287 mn for the previous year.

During a period of 6 years, overall operating expenses have shown a CAGR of 3 percent. The current cost to income ratio calculated based on non interest expenses (excluding loan loss provisions) and operating income stands at 43 percent which is marginally better than the sector. Gross non performing loan ratio as at 2QFY11 is 1.6 percent, which is relatively low, compared with the sector gross NPL of 4.9 percent for June 2011 The bank’s statutory liquid asset ratio stands at 23.96 percent as at end 2QFY11, comfortably above the regulatory minimum of 20 percent.

Having hit a low of LKR117.5 in August 2010, NDB’s share price has given a 21 percent negative YTD return. And based on the projected net profits, NDB is currently trading at a PER of 8.64x for FY11E and 7.28x for FY12.

Courtesy - The Island
http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=38681

current cost to income ratio calculated based on non interest expenses (excluding loan loss provisions). It should be based on loan loss provisions as well than we can compare it more objectively. Next year with IFRS....it is going to be difficult to make comparisons...