NSB records higher performance in 1H2019
National Savings Bank demonstrated robust performance during the first half of 2019 amidst subdued macroeconomic and market conditions, and witnessed Profit Before Tax (PBT) of LKR 4.3bn, a growth of 15.5% compared to corresponding period of 2018. The Bank recorded a Profit After Tax (PAT) of LKR2.3bn, an increase of 15.2% over the same period last year, despite the loss of With Holding Tax (WHT) on government securities amounting to LKR 1.3bn during first six months of 2019 over the same period 2018 due to removal of WHT benefit with effect from 01.04.2018. Also, additional tax of LKR 832.7mn had a negative impact on the profit during 1H2019 compared to the same period last year resulted from the implementation of Debt Repayment Levy (DRL) which came in to effect 01.10.2018 onwards. The Bank has contributed LKR 4.8bn to the Government in way of taxes and levies during the period under review.
Total income grew by 6.2% to LKR 59.1bn whilst total operating income observed a growth of 15.3% to reach at LKR 15.1bn. Net Interest Income (NII) which contributed to 90.9% to the total operating income grew by 10.9% to reach LKR13.8bn over the same period last year. Net Interest Margin (NIM) improved to 2.61% during six months ended at June 2019 against 2.39% reported in the same period last year owing to growth in interest income outsets the growth of interest expenses. Further, net fee income grew by 30.7% to LKR 499.2mn benefitted from increase in business volumes. Net gain on trading amounted to LKR 663.9mn during the period under review, growing significantly against the loss of LKR 45.2mn reported in the same period last year.
Administrative and overhead expenses during the first six months of 2019 rose in line with the enhancement of business activities. Depreciation and amortization on tangible and intangible assets increased by 65.8% due to investment made in branch network and digital infrastructure. However, the impairment charge for the six months ended 30th June 2019 was declined by 36.7% over the same period last year fuelled by redemption of Sri Lanka Development Bonds (SLDB) which was matured in 3Q2018. The resultant cost to income ratio improved to 51.3% for the period under review from 54.5% in 1H2018.
The total assets of the Bank grew by 5.2% over the 31st December 2018 to reach LKR 1.1tn supported by growth in customer deposits. Customer deposits reached to LKR907.8bn, increased by 8.1% over the end of December 2018. Net loans and advances also rose by 5.7% to LKR 447.8bn against as at the end of December 2018. At the end of first half of 2019, the Bank has managed to maintain the gross non-performing loan (NPL) ratio at 1.69% which is one of the lowest in the banking industry, demonstrating higher asset quality of the Bank.
The Bank has successfully implemented and complied with the new accounting standard on leases – SLFRS 16 which came into effect from 01.01.2019. Thereby, a sum of LKR 895.8mn of new asset was recognized and disclosed under “Right of used assets” in the financial position for the period ended 30.06.2019. Complying with the Central Bank of Sri Lanka (CBSL)’s directions on capital requirements under Basel III, the Tier 1 and total capital adequacy ratios of the Bank as of 30th June 2019 were 12.647% and 15.197% respectively, well above the statutory minimum requirements (10% and 14% respectively).
As another mile stone in NSB journey, the Bank has received the “Payment Card Industry Data Security Standard” (PCI-DSS) certification, the cardholder data security standard accepted worldwide and became the first State Bank to achieve the PCI-DSS Certification. The Bank received the certificate of compliance for PCI-DSS Version 3.2.1 from Qualified Security Assessor (QSA), SISA. The PCI Security Standards Council (PCISSC), the governing body of PCI-DSS, is a global organization for promoting Payment Card Industry Standards for the safety of cardholder data across the globe.
The NSB is the only Sri Lankan bank with a 100% government guarantee for its depositors’ money and interest therein, hence embraced the safest place for saving. The Bank has been awarded the 5th most valuable brand in Sri Lanka by the Brand Finance Lanka Ltd and Global Finance Magazine has affirmed NSB as the safest Bank in Sri Lanka for the 3rd consecutive year in 2018. The Bank has received the AAA lka rating from the Fitch Ratings Lanka Ltd for the 16th consecutive year in 2018. The Bank has been assigned [SL] AAA with Stable outlook by ICRA Lanka Limited, a group company of Moody’s Investors Service on June 2019. The rating reflects 100% government ownership and explicit guarantee on deposits, good quality lending portfolio, presently adequate capital profile and low risk investment portfolio.