COMB Quarterly Statement

The Commercial Bank recorded a commendable growth in both pre & post tax profit of 40.04% and 37.99% for the three-month period ended March 31, 2012 compared to the corresponding period in 2011.The pre & post tax profit of the Bank reached Rs. 4,145.0 M n. and 2,843.3 Mn. respectively for the period. The net interest income of the Bank surpassed the Rs.5 Bn., mark and reached Rs. 5,0 65.5 Mn., recording a growth of Rs. 735.6 Mn., or 16.99% compared to the corresponding period in 2011. The main contributory factor for this increase was the increase in interest income on loans and advances portfolio of the Bank by Rs. 2,704.2 Mn. or 42.44%. This was mainly due to the increase in the performing loans and advances portfolio of the Bank by Rs. 19.361 Bn., or 7.11% during the three months period under review. The total interest expenses of the Bank increased by Rs. 1,686.3 Mn., or 37.49% during the period under review owing to the growth in the volume of deposits of the Bank by Rs. 32.580 Bn., or 10.23% and reached Rs.351.040 Bn., and an increase in the market interest rates.

The foreign exchange income of the Bank recorded an increase of Rs. 1,785.5 Mn., or 359.6% compared to the corresponding period in 2011 mainly as a result of translation gains consequent to the depreciation of the Sri Lanka Rupee against the US Dollar during the quarter under review. The other income of the Bank, which mainly comprise of commission income and investment income too recorded an increase of Rs. 140.5 Mn., or 14.29% and reached Rs.1,123.4 Mn. Provisions on account of Bad and Doubtful Debts (net of recoveries) increased by Rs. 704.6 Mn., during the period under review compared to the corresponding period in 2011.

The total deposits of the Bank stood at Rs. 351.040 Bn. as at March 31, 2012, reflecting a growth of 10.23% from Rs.318.461 B n. as at December 31, 2011. Gross loans and advances of the Bank stood at Rs. 308.670 Bn., reflecting a growth of 7.19%. Total assets of the Bank stood at Rs. 474.952 Bn., as at March 31, 2012, recording a growth of 7.67% compared to with Rs. 441.099 Bn., as at December 31, 2011. The Commercial Bank Group which comprises Commercial Bank, its subsidiaries and associates, recorded Pre-tax profit of Rs.4,155.6 Mn., for the three months period ended March 31, 2012 compared to Rs. 2,973.3 Mn. reported for the corresponding period in 2011. This reflected a growth of Rs. 1,182.3 Mn. or 39.76%. Further, the Group recorded a post tax profit of Rs. 2,849.9 Mn., during the first three months of 2012 when compared with the post tax profit of Rs. 2,065.3 Mn. recorded during the corresponding period in 2011. This represented a growth of Rs. 784.6 Mn. Or 37.99%.

The Commercial Bank Group which comprises Commercial Bank, its subsidiaries and associates, recorded Pre-tax profit of Rs.4,155.6 Mn.,for the three months period ended March 31, 2012 compared to Rs. 2,973.3 Mn. reported for the corresponding period in 2011. This reflected a growth of Rs. 1,182.3 Mn. or 39.76%. Further, the Group recorded a post tax profit of Rs. 2,849.9 Mn., during the first three months of 2012 when compared with the post tax profit of Rs. 2,065.3 Mn. recorded during the corresponding period in 2011. This represented a growth of Rs. 784.6 Mn. Or 37.99%.

Source: COMB Financial Statements.

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NDB Bank’s Chairman’s Review

It is my pleasure to report on the strong financial results of National Development Bank PLC (NDB Bank) st for the 1 quarter ended March 31, 2012.

The reported earnings included one off equity income of Rs 271 million on the sale of its investment in a 100 percent owned subsidiary, NDB Investment Bank Ltd (NDBIB) and of the 5 percent direct holding in AVIVA NDB Insurance PLC, to its subsidiary Capital Development and Investment Company PLC (CDIC) in March 2012. NDB continues to position itself as the only Financial Services Group in the country, with subsidiaries and associates in Investment Banking (locally and regionally), Stock Broking, and Wealth Management, which make up the Capital Markets cluster, and Insurance. This divestment to the Bank’s 99.6 percent owned subsidiary CDIC was carried out as part of the overall Group’s corporate restructuring exercise, with which, CDIC now positions itself as the diversified financial services investment arm of NDB Group. Accordingly, these investments will complement CDIC’s existing strategic investments in AVIVA NDB Insurance PLC and NDB AVIVA Wealth Management Ltd.

The Bank’s Profit After Tax growth after excluding this one-off income shows an increase of 52 percent st compared to the 1 quarter of 2011. The Basic earnings per share were Rs 17.96, an increase of 68 st percent over the 1 quarter of 2011.

The NDB Group’s Profit Attributable to Shareholders for the quarter increased by 19 percent over the prior period. The growth in NDB group’s PAS was lower than the Bank’s Profit After Tax as the one-off equity income of Rs 271 million is eliminated in consolidating the NDB results. The Bank’s Return on Average Assets and Equity for the first quarter of 2012 were 2.1 percent and 22.8 percent respectively, st compared to 1.6 percent and 15.0 percent, respectively, over the 1 quarter of 2011.

The Bank’s loans and advances increased to Rs 105.2 billion as at March 31, 2012, an increase of Rs 27.4 billion, or 35 percent, compared to March 31, 2011. The NPLs to gross lending portfolio was 1.36 percent as at March 31, 2012 end compared to 1.82 percent as at March 31, 2011. The NPL ratio of the Bank continues to remain healthy and is well below the industry average. The Bank has been able to achieve this low level of delinquency due its proactive risk management practices. The Bank’s robust balance sheet and liquidity means that the Bank is able to continue its lending and maintain a strong capital adequacy. Additionally, total deposits increased to Rs 88.4 billion as at March 31, 2012, a 46 percent increase from the deposit level as at March 31, 2011. The growth in assets and deposits was the result of continuing organic growth through the Bank’s existing branch network.

The Bank also expanded its branch network to 62 branches with additional branches in Hambantota and Kaduwela. NDB continued its active engagement in SME banking with agriculture, handicrafts, manufacturing, trading & distribution, fisheries, and dairy sectors to develop the entrepreneurs in the country. During the first quarter, NDB also conducted SME capacity-building workshops in Moratuwa, Pilimathalawa, Ambalanthota and Kurunegala in an effort to enrich their knowledge base.

As part of the NDB Group, the NDB Investment Bank had a positive start to the financial year, showing dominance in the country’s investment banking arena by successfully managing the only two IPOs to debut on the CSE in the first quarter of 2012. The Access Engineering IPO raised Rs. 500 million, while the Mackwoods Energy IPO raised Rs. 350 million; both were oversubscribed on the opening day. The Investment Bank also structured several securitization deals for Finance Companies in the first quarter of 2012 and collectively raised over Rs 1.1 billion, asserting ourselves as the leading investment Bank in the country. We are excited about our first quarter results. We were able to continue the strong momentum built in 2011, and will seek further growth opportunities for the Bank throughout 2012. Our discipline in the execution of our strategies has produced excellent first quarter results. Our focused management on all of our banking operations is expected to deliver solid growth into the future and enhance shareholder value .

Hemaka Amarasuriya

Chairman

11 May 2012

Source : NDB Bank Financial Statement for the quarter ended 31st March 2012.

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