NATIONAL DEVELOPMENT BANK PLC (NDB.N0000)

NATIONAL DEVELOPMENT BANK PLC (NDB.N0000)

SKU: NDB.N0000 Categories: , Tag:

Product Description

Stock Price as of - 2016-07-13


Close 169
Open 169.5
High 169.5
Trades 5
Change -0.5
Prv Close 169.5
Low 168.0
Volume 2261

Additional Information

Established

1979

Quoted Date

1993-04-26 (yyyy-mm-dd)

Financial Year Ends

31st December

secretaries

Ms. S.A. Ranasinghe

auditors

Messrs Ernst and Young , Auditor General

registered office

40, Navam Mawatha, Colombo 2. Sri Lanka.

chairman / chairperson

Wijesinha S. G.

deputy chairman / director

Pathirage A.

ceo

Theagarajah R.

website

www.ndbbank.com

telephone

94-11-2437350

fax

2341044

isin

LK0207N00007

Issued Quantity

165093922

source / cse company link

http://www.cse.lk/company_info.do?id=77&symbol=NDB.N0000





INVESTOR RELATIONS

The Bank recognizes investors as one of the prime most stakeholders in its success journey. The long-standing trust, loyalty and confidence that our valued shareholders have placed on us has been an immense strength to us. The Bank takes conscious efforts to actively engage our shareholders in open dialogues and forums and keep them well-informed of significant developments of the Bank.

Considering the relevance and valid contribution made towards sound investor relations, our “Investor Relations” scope encompasses a range of other stakeholders in addition to shareholders. Investor engagement is done through a comprehensive range of investor relation activities, at certain instances with the aid of advance technological support, such that we are accessible to investors overseas as well.

2014 had an action packed schedule in the investor relations frontier, where we executed a number of interactive, comprehensive and open engagement activities. A highlight of the year was the Bank being recognized with a bronze award for best investor relations activities, by Chartered Financial Analysts (CFA) of Sri Lanka in their Capital Market Awards for 2014.

At the head table of the Investor Forum held in August 2014 (from left: Mr Rajendra Theagarajah - CEO of NDB, Mr Sunil G Wijesinha - Chairman of NDB, Mr Faizan Ozman - Group CFO of NDB and Mr Vajira Kulatilleke - CEO of NDB Capital Holdings PLC)

 

Investor Relations at the Bank

Investor Relations Activity Log - 2014

   
Activity Description
   
Annual General Meeting The Bank hosts its Annual General meeting as per the regulatory requirements for the same.
One to one investor meetings There is high accessibility to the senior management of the Bank for local and foreign investors. The Bank hosted over twenty one-to-one meetings during the year in Colombo with foreign investors.
Quarterly/Annual Financial Statements lodged to the Colombo Stock Exchange The Bank ensures timely lodging of quarterly and annual financials to the Colombo Stock Exchange (CSE), within the statutory deadlines for such lodgings.
Email alerts sent to investors on financial results released

Our investors are notified of financial results released, immediately after the results are lodged with the CSE, each quarter.

The notification is done via an email along with the quarterly financials and a performance commentary.

An investor presentation is also uploaded to the Bank’s corporate website subsequently.

Quarterly and annual press releases on the financial performance of the Bank and the Group A press release on the financial performance of the Bank and the Group is featured in three newspapers (in Sinhala, Tamil & English) subsequent to the release of quarterly and annual financial accounts to the CSE.
Investor Forums/On-line investor webinars

The Bank hosts an investor webinar and/or an investor forum as suitable for each quarter and financial year end, on the financial performance for the period under consideration.

The Bank hosted two investor forums and three on-line investor webinars in Colombo during 2014.

Earnings calls

The Bank participates in earnings call as and when requested by individual investors.

The Bank participated in one earnings call during the year.

Foreign Investor Forums The Bank was one of the participants in Sri Lanka’s first ever capital markets investor forum “Invest Sri Lanka – Investor Forum” held in New York in September 2014.
Investor Relations webpage within the Bank’s corporate website This webpage provides our target audience with a full spectrum of valuable information regarding the Bank’s equity and debt securities and other important aspects.

Shares of NDB Bank

1. Share Details

NDB Bank Shares Quoted Ordinary Shares
Listed exchange Colombo Stock Exchange (CSE) – Main Board
Featured stock indices All Share Price Index (ASPI)
  S&P (SL) 20 Index
  Bank Finance and Insurance (BFI)
CSE Stock symbol NDB.N0000
ISIN LK0207N00007
Bloomberg newswire code NDBB
Reuter’s newswire code NBLK

2. Share Performance 2014

2.1 Performance of the Colombo Stock Exchange - 2014

During 2014, the All Share Price Index (ASPI) grew by a significant 23.4% and closed at 7,298.95 on the 31 December 2014 while the Standard & Poor’s Sri Lanka 20 Index (S&P SL20) recorded a significant increase of 25.3% over the same period. Many milestones were achieved during the year with the S&P SL20 crossing the 4,000 mark for the first time since its inception, the ASPI crossing the 7,500 mark after a period of three and a half years and the market capitalization reaching LKR 3 trillion to close at LKR 3,104.9 million as at 31 December 2014. Additionally, the daily average turnover grew by approximately 71.0% over the year from LKR 828 million in 2013 to record LKR 1.415 billion in 2014.

The notable uptick in the market was mostly as a result of the dip in the treasury yields which reached an all-time low with the country’s objective to encourage private sector credit growth. This initiative increased investor preference to the share market due to higher returns in comparison to deposit rates.

Furthermore, expected economic development in the country over the past five years with the cessation of the civil war has attracted many foreign investors to the country. Foreign purchases reached an all-time high of LKR 105,812.5 million as at 31 December 2014.

Approximately LKR 77.7 billion was raised through debt and equity Initial Public Offerings (IPOs), rights issues, and private placements indicating that the primary market was commendably active during the year. During the course of 2014 there have been five Equity IPOs, one Equity Introduction, and 20 Debt offerings. The total raised from the five IPOs touched a three year high, with the total funds collected amounting to LKR 2,693.8 million.

Furthermore, the country’s market is performing positively in comparison to global markets; ranking among the top six best performing markets internationally and within the five best performing markets in the region, in lieu of the ASPI’s 23.4% growth figure recorded for the year.

2.2 NDB Bank Share Performance - 2014

The NDB Bank share price surged by 55.8% during the year to close at LKR 250 as at 31 December 2014 from LKR 160.50 in the previous year, outperforming the ASPI by almost two times. During the year, the share reached a high of LKR 266 (in October 2014) and a low of LKR 160.50 (in January 2014). Additionally, 400,888 new shares were issued during the year through the Equity Linked Compensation Plan which did not have a significant impact on the market price.

The final dividend for 2013 of LKR 5.00 per share was announced in February 2014 and was paid in March 2014 while an interim dividend for 2014 of LKR 7.00 per share was announced in November 2014 and was paid in December 2014.

Behaviour of the NDB Bank Share Price in Response to Key Events

 

3. Analysis of Ordinary Shareholders as at 31 December 2014 as per Rule 7.6 (x) of the Listing Rules of the Colombo Stock Exchange

3.1 Distribution of Shareholders
         
      As at 31 December 2014 As at 31 December 2013
Shareholding Range     No. of Shareholders % No. of Shares % No. of Shareholders % No. of Shares %
                     
1 1,000 5,039 62.88 1,693,820 1.03 5,212 67.73 1,760,740 1.07
1,001 10,000 2,536 31.64 8,047,949 4.87 2,048 26.61 6,352,964 3.86
10,001 100,000 351 4.38 9,678,179 5.86 346 4.50 10,076,661 6.12
100,001 1,000,000 59 0.74 18,393,531 11.14 61 0.80 20,039,880 12.17
Over 1,000,000 29 0.36 127,280,443 77.10 28 0.36 126,462,789 76.78
Total     8,014 100.00 165,093,922 100.00 7,695 100.00 164,693,034 100.00


3.2 Resident/Non-Resident Shareholding
     
  As at 31 December 2014 As at 31 December 2013
Shareholding No. of Shareholders % No. of Shares % No. of Shareholders % No. of Shares %
                 
Resident 7,865 98.14 111,113,993 67.30 7,529 97.84 115,337,647 70.03
Non-resident 149 1.86 53,979,929 32.70 166 2.16 49,355,387 29.97
Total 8,014 100.00 165,093,922 100.00 7,695 100.00 164,693,034 100.00


3.3 Individual/Institutional Shareholding
     
  As at 31 December 2014 As at 31 December 2013
Shareholding No. of Shareholders % No. of Shares % No. of Shareholders % No. of Shares %
                 
Individual 7,604 94.88 32,875,619 19.91 7,243 94.13 30,769,120 18.68
Institutional 410 5.12 132,218,303 80.09 452 5.87 133,923,914 81.32
Total 8,014 100.00 165,093,922 100.00 7,695 100.00 164,693,034 100.00

4. 20 Largest Registered Shareholders of the Bank as at 31 December 2014 as per Rule No. 7.6 (iii) of the Listing Rules of the Colombo Stock Exchange

           
  Twenty Largest Registered Shareholders as at 31 December 2014 2014 2013*
  Name No of Shares % No of Shares %
           
1. Bank of Ceylon No. 1 Account 16,371,076 9.92 16,371,076 9.94
2. Employees’ Provident Fund 16,010,248 9.70 16,010,248 9.72
3. Sri Lanka Insurance Corporation Ltd. - General Fund 9,388,488 5.69 9,388,488 5.70
4. HSBC International Nominees Ltd. - SNFE - NTAsian Discovery Master Fund 8,973,856 5.44 8,432,154 5.12
5. Dr. S Yaddehige 8,669,000 5.25 8,669,000 5.26
6. Sri Lanka Insurance Corporation Ltd. - Life Fund 7,805,426 4.73 7,805,426 4.74
7. HSBC International Nominees Ltd. - BPSS LUX - Aberdeen Global Asia Pacific Equity Fund 5,715,450 3.46 5,715,450 3.47
8. Employees’ Trust Fund Board 5,303,700 3.21 5,303,700 3.22
9. BNY-CF Ruffer Investment Funds: CF Ruffer Pacific Fund 4,850,000 2.94 3,000,000 1.82
10. HSBC International Nominees Ltd. - MSNY - BAY Pond Partners L.P. 4,501,200 2.73 4,501,200 2.73
11. HSBC International Nominees Ltd. - BP2S London - Aberdeen Asia Pacific Equity Fund 4,294,800 2.60 0 0.00
12. Hatton National Bank PLC A/C No. 01 4,282,200 2.59 4,282,200 2.60
13. Asian Alliance Insurance PLC - Account Number 03/Life Shareholders’ Fund 3,450,977 2.09 3,450,977 2.10
14. Mr. A K Pathirage 2,970,000 1.80 2,970,000 1.80
15. Asian Alliance Insurance PLC - General Fund Account No. 01 2,540,977 1.54 2,540,977 1.54
16. Asiri Hospital Holdings PLC 2,411,583 1.46 2,411,583 1.46
17. Asian Alliance Insurance PLC - A/C 02 (Life Fund) 2,159,746 1.31 2,159,746 1.31
18. HSBC International Nominees Ltd. - MSNY - BAY Pond Investors (Bermuda) LP 2,045,200 1.24 2,045,200 1.24
19. DFCC Bank A/C 1 2,000,000 1.21 2,000,000 1.21
20. HSBC International Nominees Ltd. - BP2S London - Aberdeen Asia Smaller Companies Investment Trust 1,683,000 1.02 1,683,000 1.02
  Total 115,426,927 69.92 108,740,425 66.03

*Comparative shareholdings as at 31 December 2013 is of the twenty largest shareholders as at 31 December 2013.

5. Public Shareholding

     
  2014 2013
     
Percentage of shares held by the public* 90.25% 75.62%
Number of public shareholders** 7,982

*The increase in the public holding percentage as at 31 December 2014 is largely owing to the change in the definition of the ‘public holding’ in the Listing Rules of the Colombo Stock Exchange with effect from the year 2014.

** As per the Listing Rules of the Colombo Stock Exchange applicable in the year 2013 there was no requirement to disclose the number of public shareholders as at the end of the said year.

6. Directors’ Interest in Shares of the Bank

     
Name As at

31 December 2014

No. of Shares
As at

31 December 2013

No. of Shares
     
Sunil G Wijesinha 880 880
Ashok Pathirage 3,993,000* 3,993,000*
Rajendra Theagarajah 126 126
Trevine Jayasekera
Kimarli Fernando
Anura Siriwardana
Sarath Wikramanayake
G D Chandra Ekanayake
Sujeewa Rajapakse
Indrani Sugathadasa

*Includes shares held in slash account

7. Information on Share Trading

7.1 Share Price Movement Trend over the Past Five Years
           
Year 2014 2013 2012 2011 2010
           
Highest price (LKR) 266.00 182.50 155.00 186.00 410.00
Lowest price (LKR) 160.50 138.00 96.00 120.00 202.00
Price as at 31 December (LKR) 250.00 160.50 137.90 138.10 349.50
Total number of shares in issue 165,093,922 164,693,034 164,201,902 164,201,902 82,100,951

7.2 Information on Share Trading
           
Year 2014 2013 2012 2011 2010
           
(a) Number of transactions 8,917 11,406 9,854 7,906 11,862
(b) Number of shares traded 25,871,855 31,631,020 21,406,492 20,108,047 32,390,146
(c) Value of shares traded (LKR million) 5,452 5,112 2,676 3,737 8,514

7.3 Information on Market Capitalization, Shareholder Funds and Beta Measurement of the NDB Share
           
Year 2014 2013 2012 2011 2010
           
Shareholder funds (NDB) in LKR million 27,876 24,514 24,883 16,925 15,281
Market capitalization (NDB) in LKR million 41,273 26,433 22,643 22,676 28,694
Market capitalization (CSE) in LKR million 3,104,864 2,422,985 2,167,581 2,213,873 2,210,452
NDBZs market capitalization as a percentage of CSE market capitalization 1.33% 1.09% 1.04 % 1.02% 1.30%
Market capitalization rank of NDB 16 20 22 23 20
Beta values against ASPI 1.30 0.97 0.73 0.86 1.18
Beta values against S&P SL20 1.23 1.22 1.01 0.92 1.00

7.4 NDB Share Performance in Comparison with Selected Indices

7.5 Key Shareholder Metrics Behaviour over the Past Five Years
           
Year 2014 2013 2012 2011 2010
           
Return on equity (%) 15.78 10.70 42.35 15.69 14.72
Earnings per share (EPS) (LKR) 25.14 16.48 55.31 15.79 12.82
Dividend per share (DPS) (LKR) 11.00 10.00 15.00 7.50 8.50
Dividend yield (%) 4.40 6.23 10.88 5.43 4.86
Dividend payout ratio (%) 44.00 62.0 79.0 49.0 33.0
Net asset value per share (LKR) 169.35 148.85 151.54 103.08 93.06
Price earnings ratio (PE ratio) (Times) 9.94 9.74 2.49 8.75 13.63
Price to book value (Times) 1.44 1.08 0.91 1.34 1.88
Total shareholder return ratio (TSR) (%) 63.23 30.89 2.75 (18.68) 75.49

 

7.6 Return on Equity Compared with Market Interest Rates

7.7 Equity-Linked Compensation Plan (ELCP)

On 30 March 2010, shareholders of the Bank approved an Equity Linked Compensation Plan (ELCP), to enable the management staff in the rank of Assistant Vice-President and above of the Bank to take part in the voting ordinary share capital of the Bank, subject to certain limits, terms and conditions. As per the ELCP, the eligible members of the staff have exercised share options amounting to 400,888 shares during the year ended 31 December 2014. Accordingly, the said share issue resulted in the increase of the stated capital of the Bank from LKR 1,172.9 million to LKR 1,225.16 million and the number of shares in issue from 164,693,034 to 165,093,922 as at 31 December 2014.

7.8 Employee Share Option Schemes (ESOS)

The Colombo Stock Exchange (CSE), by Listing Rule 5.6 has amended the rules relating to Employee Share Option Schemes (ESOS) and Employee Share Purchase Schemes (ESPS) by mandating that such schemes should result in the shares being offered to eligible employees for ‘purchase’ or ‘subscription’ in the case of ESOS and ‘acquisition’ in the case of ESPS, specifically prohibiting open ended schemes. In compliance with this ruling and the Transitional Provisions thereto, the Board of Directors of National Development Bank PLC (NDB) approved the dissolution of the NDB ESOP Trust and the distribution of the ESOP shares amounting to 4,133,726 to the eligible employees of NDB.

Debentures of NDB

8. Types of Debentures

8.1 Listed Debenture - NDB.B000

In December 2013, the Bank issued by way of a public offer, one hundred million (100,000,000) rated, unsecured, subordinated, redeemable debentures (RUSRD) of the par value of rupees one hundred (LKR 100/-) each aggregating to the value of rupees ten thousand million (LKR 100,000,000,000/-).

The proceeds of these debentures were utilized to support the Bank’s Tier II capital.



8.1 (a) Key Features of the RUSRD-NDB.B0000
               
Type of Debentures Debenture Code ISIN Nominal Interest Rate per Annum Annual Effective Rate per Annum Redemption (from the Date of Allotment) Interest Payment Frequency Interest Payment Dates
               
Type A NDB/BC/19/12/18A13 LK0207D20998 13.00% 13.42% 60 months (5 years) Semi-Annually 30 June & 31 December
Type B NDB/BC/19/12/18B13.4 LK0207D21012 13.40% 13.40% 60 months (5 years) Annually 31 December
Type C NDB/BC/19/12/23C13.9 LK0207D21038 13.90% 13.90% 120 months (10 years) Annually 31 December
Type D NDB/BC/19/12/25D14 LK0207D21053 14.00% 14.00% 144 months (12 years) Annually 31 December


8.1 (b) Trading Details of the RUSRD-NDB.B000 for the year ended 31 December 2014
                         
Type of Debenture       Market Value   Interest Rate      
  CSE Listing Interest payable frequency Balance as at 31 December 2014 Highest Lowest Quarter End   Coupon Rate Effective Annual Interest rate of Compa- rable Interest Yield Yield To Maturity
      LKR million LKR LKR LKR   % Yield % Security % % %
                         
Fixed Rate                        
A - Dec. 2013/

Dec. 2018
Listed Semi Annually 1,243 119.53 100.00 119.53   13.00 13.42 9.78 7.25 7%
B - Dec. 2013/

Dec. 2018
Listed Annually 1,529 112.26 111.28 112.26   13.40 13.40 9.78 9.58 10%
C - Dec. 2013/

Dec. 2023
Listed Annually 3,638 118.1 112.5 117.38   13.90 13.90 11.00 10.78 10.78
D - Dec. 2013/

Dec. 2025
Listed Annually 3,590 119.95 119.23 119.95   14.00 14.00 11.39 10.90 10.9
Total Debentures     10,000                  

 

8.2 Unlisted - Privately Placed Debentures

In 2011, the Bank privately placed rated subordinated unsecured unlisted debentures having an aggregate face value of LKR 400,000,000/-. The proceeds of these debentures were utilized for re-lending purposes. The details of the said debentures are as follows:

8.2. (a) Key Features of the Unlisted - Privately Placed Debentures
           
Date Amount LKR Number of Debentures Value LKR Redemption Rate of interest
           
30 June 2011 1,000/- each 110,000 110,000,000 30 June 2016 03 month gross TBR* + 1.00% per annum
22 July 2011 1,000/- each 290,000 290,000,000 30 June 2016 03 month gross TBR* + 1.00% per annum

*Treasury Bill Rate.

8.2. (b) Other Information of the Unlisted - Privately Placed Debentures
               
Type of Debenture CSE Listing Interest payable frequency Balance as at 31 December 2014   Coupon Rate Effective Annual Interest rate of Comparable
      LKR million   % Yield % Security %
               
               
Floating Rate              
2011- 2016 (3 month TB* rate

(gross)+1% p.a.)
Unlisted Quarterly 400   11.43 11.93 7.78
Total Debentures     400        

* Three months Treasury Bill rate before deducting 10% Withholding tax as published by the Central Bank of Sri Lanka has been used.

9. Information on Debentures of the Bank as per Rule No. 7.6 x (i) of the Listing Rules of the Colombo Stock Exchange

     
  2014 2013
     
Debt Equity Ratio (Times) 10.43 8.99
Interest cover (Times) 1.58 1.49
Liquidity Assets Ratio (%) – Domestic Banking Unit 23.85 26.22
Liquidity Assets Ratio (%) – Foreign Currency Banking Unit 25.18 26.06

10. Directors’ Interest in Debentures (NDB.B0000) as at 31 December 2014

     
Name As at

31 December 2014

No of Debentures
As at

31 December 2013

No of Debentures
     
Sunil G Wijesinha 10,000 10,000
Ashok Pathirage
Rajendra Theagarajah
Trevine Jayasekera
Kimarli Fernando
Anura Siriwardana
Sarath Wikramanayake
G D Chandra Ekanayake
Sujeewa Rajapakse
Indrani Sugathadasa

Bank’s Credit Ratings

11. Ratings Summary of the Bank - 2014

11.1 Rating entity Fitch Ratings
  Date of report 23 June 2014
  National long-term rating AA- (lka)/Stable outlook
  Outstanding subordinated debentures A+ (lka)
  Long-term foreign currency & local currency issuer default ratings (IDR) B+/Stable outlook
  Short-term foreign currency IDR B
  Viability rating b+
  Support rating 4
  Support rating floor B
11.2 Rating entity Standard & Poor's Ratings Services
  Date of report 27 June 2014
  Counterparty Credit Rating B+/Stable/B
  Counterparty Credit Ratings History (26 June 2013) B+/Stable/B



There have been no changes to the ratings issued in 2014 in comparison to ratings issued in the prior year.

Please refer our Investor Relations web page within the NDB Corporate website on http://www.ndbbank.com to read full rating reports of Fitch Ratings and Standard and Poor’s Rating Services.

Other Information

12. Financial Statements in USD

12.1 Statement of Profit or Loss
  BANK GROUP
For the year ended 31 December 2014 

US$ ’000
2013 

US$ ’000
Change % 2014 

US$ ’000
2013 

US$ ’000
Change %
             
Gross income 190,870 229,672   200,372 195,960  
Interest income 160,381 159,250 1 161,737 160,503 1
Interest expenses 101,698 106,597 (5) 101,228 106,309 (5)
Net interest income 58,683 52,653 11 60,509 54,194 12
Fee and commission income 14,270 12,476 14 19,606 18,674 5
Net gains/(losses) from trading 6,958 7,383 (6) 6,958 7,383 (6)
Net gain/(loss) from financial investments 5,479 2,446 124 10,173 7,086 44
Other operating income 3,782 47,666 (92) 1,897 1,928 (2)
Total operating income 89,172 122,623 (27) 99,143 89,264 11
Impairment for loans and receivables and other losses 4,328 9,570 (55) 4,043 9,745 (59)
Net operating income 84,844 113,053 (25) 95,100 79,519 20
Less: Operating expenses            
Personnel expenses 21,966 18,466 19 24,257 20,562 18
Other expenses 18,630 19,748 (6) 20,938 22,442 (7)
Total operating expenses 40,596 38,214 6 45,195 43,004 5
Operating profit before tax on financial services 44,248 74,839 (41) 49,905 36,515 37
Tax on financial services (7,870) (7,037) 12 (7,870) (7,037) 12
Operating profit after tax on financial services 36,378 67,802 (46) 42,035 29,478 43
Share of associate companies’ profits/(losses) 744 380 96
Profit before taxation 36,378 67,802 (46) 42,779 29,858 43
Taxation (10,242) (8,106) 26 (10,313) (8,895) 16
Profit for the year 26,136 59,696 (56) 32,466 20,963 55
Profit attributable to:            
Equity holders of the parent 26,136 59,696 (56) 31,610 20,420 55
Non-controlling interests 856 543 58
  26,136 59,696 (56) 32,466 20,963 55


12.2 Statement of Comprehensive Income
  BANK GROUP
For the year ended 31 December 2014

US$ ’000
2013

US$ ’000
Change % 2014

US$ ’000
2013

US$ ’000
Change %
             
Profit for the year 26,136 59,696 (56) 32,466 20,963 55
Other comprehensive income/(expenses) to be reclassified to profit or loss insubsequent periods            
Exchange differences on translation of foreign operations 4 (86) 100
Net gains and losses on Available-for-Sale investments (268) 1,147 (123) (168) 1,620 (110)
Gains and losses on cash flow hedges 3,042 100 3,042 100
Other comprehensive income /(expenses) not to be reclassified to profit or loss insubsequent periods            
Revaluation of freehold land & buildings 8,290 100 8,290 100
Actuarial losses on defined benefit plans (1,068) (276) 286 (1,068) (274) 289
Total other comprehensive income 9,996 871 1,048 10,100 1,259 702
Less: Tax expenses relating to components of other comprehensive income (1,377) (295) 367 (1,377) (429) 224
Other comprehensive income for the year, net of taxes 8,619 576 1,396 8,723 830 949
Total comprehensive income for the year 34,755 60,270 (42) 41,189 21,793 89
Attributable to:            
Equity holders of the parent 34,755 60,270 (42) 40,331 21,250 90
Non-controlling interest 858 534 61
  34,755 60,270 (42) 41,189 21,793 89

 

12.3 Statement of Financial Position
    BANK GROUP
As at 31 December Note 2014 

US$ ’000
2013 

US$ ’000
Change % 2014 

US$ ’000
2013 

US$ ’000
Change %
               
Assets              
Cash and cash equivalents   23,536 19,970 18 24,822 20,407 22
Balances with Central Bank   51,104 40,834 25 51,104 40,834 25
Placements with banks   20,636 1,000 1,964 20,636 1,000 1,964
Derivative financial instruments   14,434 8,792 64 14,434 8,792 64
Financial assets held-for-trading   21,117 81,994 (74) 45,706 108,559 (58)
Loans and receivables to banks   2,359 4,907 (52) 2,359 4,907 (52)
Loans and receivables to other customers   1,328,091 1,046,436 27 1,328,551 1,046,896 27
Financial investments - loans and receivables   290,390 121,128 140 293,279 128,426 128
Financial investments - Available-for-Sale   129,343 45,755 183 136,906 47,170 190
Financial investments - held-to-maturity   68,013 134,625 (49) 77,084 141,190 (45)
Investments held for sale   140 100 252 100
Investments in subsidiary companies   15,165 15,584 (3)
Investments in associate companies   474 (100) 587 (100)
Investment property   11,719 10,583 11
Intangible assets   1,919 1,992 (4) 2,252 2,269 (1)
Property, plant & equipment   14,613 6,676 119 17,078 8,998 90
Other assets   11,021 9,097 21 14,224 11,157 28
Total assets   1,991,881 1,539,263 29 2,040,406 1,581,775 29
Liabilities              
Due to banks   53,293 79,947 (33) 53,293 79,947 (33)
Derivative financial instruments   5,028 6,251 (20) 5,028 6,251 (20)
Due to other customers   1,151,052 992,964 16 1,148,485 989,842 16
Debt securities issued and other borrowed funds   469,715 186,775 151 469,491 186,545 152
Tax liabilities   6,268 2,035 208 6,112 2,296 166
Deferred tax liabilities   4,696 2,390 97 4,624 2,481 86
Employee benefit liabilities   1,873 1,300 44 2,199 1,643 34
Other liabilities   46,828 28,189 66 48,309 29,448 64
Subordinated term debts   84,529 89,351 (5) 84,529 89,351 (5)
Total liabilities   1,823,282 1,389,202 31 1,822,070 1,387,805 31
Equity              
Stated capital   9,289 8,971 4 8,683 7,218 20
Statutory reserve fund   7,663 7,331 5 7,663 7,331 5
Retained earnings   141,209 119,719 18 183,820 158,561 16
Other reserves   10,438 14,040 (26) 11,174 14,377 (22)
Total equity to equity holders of the Bank   168,599 150,061 0 211,340 187,486 18
Non-controlling interest     6,996 6,484 8
Total equity   168,599 150,061 12 218,336 193,971 13
Total liabilities and total equity   1,991,881 1,539,263 29 2,040,406 1,581,775 29
Commitments and contingencies   1,752,416 1,355,260 29 1,752,455 1,355,260 29

USD Accounts

The Statement of profit or loss, Statement of Comprehensive Income and the Statement of Financial Position given in USD are solely for the shareholders, investors and any other users of financial information and do not form part of the audited Financial Statements.

13. Interim Financial Performance

13.1 Statement of Profit or Loss
                 
BANK 

LKR ’000
Quarter 4 31.12.2014 Quarter 3 30.09.2014 Quarter 2 30.06.2014 Quarter 1 31.03.2014 Quarter 4 31.12.2013 Quarter 3 30.09.2013 Quarter 2 30.06.2013 Quarter 1 31.03.2013
                 
Net interest income 1,893,935 2,011,647 1,973,188 1,795,831 1,811,582 1,811,528 1,793,005 1,575,021
Other operating income 889,176 909,803 898,997 1,289,390 831,892 779,357 747,425 6,517,490
Total operating income 2,783,111 2,921,450 2,872,185 3,085,221 2,643,474 2,590,885 2,540,430 8,092,511
Impairment for loans and receivables and other losses 242,428 101,449 193,633 28,493 1,012,095 77,202 98,735 50,171
Net operating income 2,540,683 2,820,001 2,678,552 3,056,728 1,631,379 2,513,683 2,441,695 8,042,340
Total operating expenses 1,393,055 1,378,336 1,229,405 1,308,396 1,330,607 1,281,566 1,177,257 1,154,773
Profit from operations 1,147,628 1,441,665 1,449,147 1,748,332 300,772 1,232,117 1,264,438 6,887,567
Share of associate companies' profit
Profit before taxation 1,147,628 1,441,665 1,449,147 1,748,332 300,772 1,232,117 1,264,438 6,887,567
Taxation (547,209) (502,867) (769,134) (549,500) (131,775) (538,804) (672,704) (618,375)
Profit for the period 600,419 938,798 680,013 1,198,832 168,997 693,313 591,734 6,269,192
Profit attributable to:                
Equity holders of the parent 600,419 938,798 680,013 1,198,832 168,997 693,313 591,734 6,269,192
Non-controlling interests
  600,419 938,798 680,013 1,198,832 168,997 693,313 591,734 6,269,192
Basic earnings per share

(in LKR)
3.64 5.69 4.02 5.78 1.03 4.21 3.60 38.18
Diluted earnings per share

(in LKR)
3.63 5.68 4.01 5.78 1.03 4.21 3.60 38.18



 

                 
Group 

LKR ’000
Quarter 4 31.12.2014 Quarter 3 30.09.2014 Quarter 2 30.06.2014 Quarter 1 31.03.2014 Quarter 4 31.12.2013 Quarter 3 30.09.2013 Quarter 2 30.06.2013 Quarter 1 31.03.2013
                 
Net interest income 1,952,090 2,064,925 2,033,432 1,862,959 1,782,679 1,858,010 1,836,605 1,608,231
Other operating income 1,341,065 1,309,395 1,035,734 1,366,455 1,443,552 1,067,697 1,089,447 865,197
Total operating income 3,293,155 3,374,320 3,069,166 3,229,414 3,226,231 2,925,707 2,926,052 2,473,427
Impairment charges for loans and other losses 222,964 85,776 94,385 125,584 1,055,348 83,201 98,735 23,480
Net operating income 3,070,191 3,288,544 2,974,781 3,103,830 2,170,883 2,842,506 2,827,317 2,449,948
Total operating expenses 1,605,584 1,522,422 1,349,455 1,433,155 1,524,781 1,408,122 1,309,853 1,322,364
Profit from operations 1,464,607 1,766,122 1,625,326 1,670,675 646,102 1,434,384 1,517,464 1,127,584
Share of associate companies' profit 97,274 9,562 28,980 8,210 2,468
Profit before taxation 1,464,607 1,766,122 1,625,326 1,767,949 655,664 1,463,364 1,525,674 1,130,051
Taxation (527,635) (514,722) (772,596) (563,080) (155,537) (558,259) (718,646) (630,088)
Profit for the period 936,972 1,251,400 852,730 1,204,869 500,127 905,105 807,028 499,964
Profit attributable to:                
Equity holders of the parent 857,660 1,242,340 843,045 1,190,885 445,319 891,961 797,753 506,888
Non-controlling interest 79,312 9,060 9,685 13,984 54,808 13,144 9,275 (6,924)
  936,972 1,251,400 852,730 1,204,869 500,127 905,105 807,028 499,964
Basic earnings per share

(in LKR)
5.68 7.75 5.24 7.41 2.78 5.42 4.98 1.06
Diluted earnings per share

(in LKR)
5.34 7.62 5.24 7.41 2.77 5.41 4.99 1.07


13.2 Statement of Financial Position
                 
BANK 

LKR ’000
As at

31.12.2014
As at

30.09.2014
As at

30.06.2014
As at

31.03.2014
As at

31.12.2013
As at

30.09.2013
As at 

30.06.2013
As at 

31.03.2013
                 
Cash and cash equivalents 12,566,872 19,509,158 9,162,267 8,361,127 8,080,826 8,746,703 15,224,455 16,863,330
Net loans and receivables 175,486,347 164,951,727 153,743,532 145,414,432 153,300,614 138,392,710 129,713,266 124,412,209
Investments 69,137,785 64,784,042 66,953,926 50,778,802 36,361,300 33,490,390 31,097,184 28,680,784
Other assets 5,538,140 5,603,313 3,522,678 2,884,388 3,393,034 2,595,732 4,257,589 3,484,992
Total 262,729,144 254,848,240 233,382,403 207,438,749 201,135,774 183,225,534 180,292,494 173,441,316
Customer deposits 151,823,715 150,515,133 139,500,487 135,282,343 129,830,029 118,489,102 117,639,980 110,091,898
Borrowings 80,134,243 74,010,835 66,633,874 47,287,695 46,556,578 39,878,258 36,845,563 36,879,823
Other liabilities 8,532,996 7,408,478 6,660,594 4,964,604 5,093,626 4,682,789 6,404,693 7,721,034
Shareholders Funds 22,238,190 22,913,794 20,587,448 19,904,106 19,655,542 20,175,384 19,402,258 18,748,561
Total 262,729,144 254,848,240 233,382,403 207,438,749 201,135,774 183,225,533 180,292,494 173,441,316
                 
Net asset value 134.70 138.84 124.77 120.84 119.13 122.50 118.16 114.18



 

                 
Group 

LKR ’000
As at 

31.12.2014
As at 

30.09.2014
As at

30.06.2014
As at 

31.03.2014
As at

31.12.2013
As at 

30.09.2013
As at 

30.06.2013
As at 

31.03.2013
                 
Cash and cash equivalents 12,736,516 19,593,374 9,356,993 8,464,024 8,138,013 8,794,081 15,285,968 17,108,941
Net loans and receivables 175,547,049 164,945,855 153,767,778 145,472,939 137,523,341 138,663,070 130,152,065 125,004,814
Investments 72,970,512 68,607,489 70,575,810 54,259,369 55,690,627 36,401,141 33,578,308 30,834,571
Other assets 7,875,528 7,690,060 5,474,132 4,856,066 5,465,140 4,448,933 6,200,663 5,315,740
Total 269,129,605 260,836,778 239,174,713 213,052,398 206,817,121 188,307,225 185,217,004 178,264,066
Customer deposits 151,485,202 150,211,397 139,226,384 134,984,443 129,421,813 118,094,538 117,290,318 109,742,736
Borrowings 80,104,583 74,026,906 66,605,559 47,257,695 46,526,578 39,841,559 36,800,553 36,850,288
Other liabilities 8,741,401 7,536,486 6,926,198 5,219,171 5,507,076 4,819,685 6,560,392 7,940,684
Shareholders’ funds 27,875,773 28,218,815 25,582,366 24,730,358 24,513,808 24,757,448 23,785,039 22,926,435
Non-controlling interest 922,646 843,174 834,206 860,731 847,846 793,995 780,702 803,923
Total 269,129,605 260,836,778 239,174,713 213,052,398 206,817,121 188,307,225 185,217,004 178,264,066
                 
Net asset value 169.35 175.92 159.51 154.00 148.85 150.32 144.85 139.62

14. Ten Years at a Glance (Group Performance)

14.1 Statement of Profit or Loss
                     
LKR million 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
                     
Income                    
Net interest income 2,693 2,853 3,522 3,787 4,233 4,163 4,910 5,896 7,012 7,913
Other operating income 2,081 2,133 1,474 1,662 2,560 2,785 3,012 9,042 4,537 5,053
Total operating income 4,774 4,986 4,997 5,449 6,793 6,948 7,922 14,938 11,549 12,966
Impairment for loans & receivables and other losses 153 13 65 116 373 (172) (88) 51 1,261 529
Net operating income 4,621 4,972 4,932 5,333 6,420 7,119 8,010 14,887 10,288 12,437
Less Operating Expenses                    
Personnel costs 1,132 830 949 1,151 1,300 1,567 2,118 2,333 2,660 3,172
Other operating costs 1,645 929 1,104 1,237 1,370 1,496 1,863 2,163 2,904 2,738
Total operating expenses 2,777 1,760 2,053 2,388 2,670 3,063 3,981 4,496 5,564 5,910
                     
Operating Profit before Share of associate Companies profit before tax 1,844 3,213 2,879 2,945 3,750 4,056 4,030 10,391 4,724 6,527
Share of associate Companies profit 22 214 179 172 526 295 331 439 49 97
Profit before taxation 1,866 3,427 3,058 3,118 4,276 4,351 4,361 10,830 4,773 6,624
Taxation (593) (1,220) (1,421) (1,409) (2,154) (2,175) (1,597) (1,898) (2,061) (2,378)
Profit after taxation 1,273 2,207 1,637 1,708 2,121 2,176 2,764 8,932 2,712 4,246
Minority interest (237) (176) (115) (103) (37) (73) (235) (78) (70) (112)
Profit attributable to equity holders of the parent 1,036 2,030 1,521 1,605 2,085 2,103 2,528 8,854 2,642 4,134


14.2 Statement of Financial Position
                     
LKR million 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
                     
Assets                    
Liquid assets 2,917 6,042 7,748 5,883 8,243 5,586 7,651 13,269 8,139 12,737
Investments 19,078 12,170 14,701 18,509 32,128 20,021 27,359 32,499 55,614 72,971
Loans and receivables 36,976 42,418 49,818 54,589 54,107 78,452 102,019 124,311 137,523 175,547
Investments in associate companies 241 1,179 1,210 1,393 1,724 1,763 1,797 33 77
Property, plant & equipment 1,162 691 804 781 806 918 1,504 1,541 1,473 2,550
Investment property 1,041 1,200 1,200 1,200 1,200 1,200 1,296 1,296 1,384 1,546
Other assets 3,006 1,276 661 925 1,075 691 962 1,154 2,608 3,780
Goodwill 873 4 4    
Total Assets 65,295 64,977 76,143 83,280 99,286 108,635 142,588 174,103 206,818 269,130
Liabilities                    
Borrowings 27,799 29,204 34,147 34,993 29,561 28,631 38,973 36,630 47,344 80,104
Deposits with customers 13,954 21,161 25,624 31,091 49,948 60,533 82,094 107,394 129,423 151,485
Non-life insurance reserves 859  
Long-term insurance fund 9,238  
Taxation 220 640 522 352 560 633 397 713 625 1,416
Other liabilities 2,855 2,091 2,750 3,614 4,334 2,826 3,286 3,657 4,062 7,326
Total Liabilities 54,925 53,096 63,043 70,050 84,403 92,623 124,750 148,394 181,454 240,331
Shareholders’ Funds                    
Stated capital 760 1,033 1,033 1,033 1,033 864 864 864 944 1,145
Statutory reserves 546 819 819 819 819 879 879 879 959 1,011
Other reserves 387 924 1,880 1,474
Retained earnings 7,850 8,715 9,833 10,811 12,345 13,552 14,796 22,216 20,733 24,246
Total shareholders' funds 9,155 10,567 11,685 12,662 14,197 15,295 16,926 24,883 24,516 27,876
Minority interest 1,215 1,314 1,415 568 687 717 913 826 848 923
Total funds employed 10,370 11,881 13,100 13,230 14,883 16,012 17,838 25,709 25,364 28,799
Total liabilities & funds employed 65,295 64,977 76,143 83,280 99,286 108,635 142,588 174,103 206,818 269,130
                     
14.3 Share Information
Market price per share (LKR) 215.00 201.00 170.00 86.00 206.00 174.50 138.10 138.10 161.50 250.00
Basic earnings per share (LKR) 11.20 12.40 9.30 9.80 12.75 12.81 15.79 55.31 16.48 25.14
Interim dividends per share (LKR) 4.00 3.50 5.00 5.00 7.00
Final dividends per share (LKR) 6.00 4.00 6.00 6.75 8.00 4.50 4.00 10.00 5.00 4.00
Total dividends per share 6.00 4.00 6.00 6.75 8.00 8.50 7.50 15.00 10.00 11.00
Dividend cover (Times) 3.21 6.20 3.72 3.27 3.77 2.19 2.05 3.69 1.65 2.29
Price earnings ratio (Times) 9.95 8.10 9.14 4.39 8.08 13.63 8.97 2.56 9.74 9.94
Book value per share (LKR) 79.80 64.54 71.38 77.35 86.72 93.15 103.08 151.54 148.85 169.35

15. Compliance Report in Terms of Section 7.6 - Contents of the Annual Report in Terms of the Listing Rules of the Colombo Stock Exchange

Tabulated below is how we complied with the Contents of the Annual Report as specified in Section 7.6 of the Listing Rules issued by the Colombo Stock Exchange. The table provides the disclosure requirements of Section 7.6, the compliance level of the Bank and where you will find the respective disclosures within this Annual Report.

   
Rule No: Disclosure Requirement
   
7.6 (i) Names of persons, who during the financial year, were Directors of the Entity
7.6 (ii) Principal activities of the Entity and its subsidiaries during the year and any changes therein
7.6 (iii) The names and the number of shares held by the 20 largest holders of voting shares and the percentage of such shares held
7.6 (iv) The Public Holding percentage
7.6 (v) A statement of each Director’s holding and Chief Executive Officer’s holding in shares of the Entity at the beginning and end of the financial year
7.6 (vi) Information pertaining to material foreseeable risk factors of the Entity
7.6 (vii) Details of material issues pertaining to employees and industrial relations of the Entity
7.6 (viii) Extents, locations, valuations and the number of buildings of the Entity’s land holdings and investment properties
7.6 (ix) Number of shares representing the Entity’s stated capital
7.6 (x) A distribution schedule of the number of holders in each class of equity securities, and the percentage of their total holdings
7.6 (xi) Ratios and Market Price Information
 
  • Equity: Dividend per share, Dividend payout, Net asset value per share, Market value per share (highest and lowest values recorded during the financial year and value as at the end of financial year);
 
  • Debt: Interest rate of comparable Government Security, debt/equity ratio, quick assets ratio, market prices and yield during the year.
 
  • Any changes in the credit rating (for the entity or any other instruments issued by the entity), if applicable.
7.6 (xii) Significant changes in the Entitys or its subsidiaries fixed assets and the market value of land, if the value differs substantially from the book value
7.6 (xiii) Details of the funds raised either through a public issue, Rights Issue or private placement;

  • A statement as to the manner in which the proceeds of such issue has been utilized.
  • If any shares or debentures have been issued, the number, class and consideration received and the reason for the issue; and
  • Any material change in the use of funds raised through an issue of Securities.
7.6 (xiv) Employee share option scheme details Employee share purchase schemes
7.6 (xv) Disclosures pertaining to Corporate Governance practices in terms of Rules 7.10.3, 7.10.5 c. and 7.10.6 c. of Section 7 of the Rules.
7.6 (xvi) Related party transactions exceeding 10% of the Equity or 5% of the total assets of the Entity as per Audited Financial Statements, whichever is lower

16. Shareholder Enquires and Communications

Investor Relations Team 

Ms. Suvendrini Muthukumarana 

Assistant Vice-President 

Tel.: + 94 112 448 448 / Ext. 3817

Fax: + 94 112 341 047 

Email: [email protected]
Company Secretariat 

Ms. Shehani Ranasinghe 

Company Secretary 

Tel.: + 94 112 448 448 / Ext. 3080 

Fax: + 94 112 341 050 

Email: [email protected]
Address: National Development Bank PLC, No. 40, Navam Mawatha, Colombo 02, Sri Lanka.



Board of Directors

Senior Management Team

Group Management Team

We said it before last year. Change is in the air; more relevant now than ever before. Within this context, the Bank propounds a redefinition of ‘development banking’. It is about the fruits of development reaching the citizenry and every man and woman having access to banking services. In short, it is one that balances economic growth and environmental stewardship with social equity.


Seeing the Big Picture

Development oriented commercial banking per se, means many things to many people. To us, it is a broad canvas. It begins with an appreciation of an individual’s basic needs such as access to affordable housing finance, the ability to own personal transportation and access to finance for education. As one moves up the hierarchy of needs, the Bank too is there all the way, from micro financing to get a fledgling business off the ground to an array of innovative savings solutions to fit any wallet. These go beyond mere finance, as a host of complementary support services are very much part of the package we offer to the micro and small & medium enterprise sector.

Further up the ladder, we continue to nurture thousands of enterprises in the middle market segment to thrive and grow. At the top end of the pyramid, we provide a full suite of commercial, development and investment banking products and services through the Bank and its Group companies. In fact, it is this synergy that enables us to seamlessly bundle and deliver customized financial solutions of value right across the board...whatever the size of business, wherever it is located in whichever economic sector.

It is a far-sighted philosophy that goes beyond only making profits or being the best in our industry, but one that illustrates the importance of seeing the big picture...a picture that depicts the interdependency between the twin goals of deriving and delivering value across a broad spectrum of stakeholders. Indeed, a unique value proposition that provides a true developmental flavour to our enterprise.

Walking the Talk

It is said painting is self-discovery, but just seeing the big picture is not enough. Leadership is demonstrated through both seeing that picture and by ensuring that others also see it. We worked on this home truth during the year by building a shared vision across all employees of the Bank.

Our vision to be a world-class Sri Lankan bank is underpinned by five core corporate values, namely, integrity, care, passion, teamwork and service. Going beyond mere corporate window dressing, we chose to bring life to these core values through real life action. It’s the sort of acid test that makes good companies great and great companies legends. The launch of 'The NDB Spirit Achievers Programme' during the year was the beginning of such a journey.

This is an award scheme designed to recognize members of staff who actively demonstrate that such values are at the very heart of the Bank’s business through their actions, behaviour, responses in times of difficulty and engagement with fellow staff, customers and wider communities.

The Programme is thus an exciting new dimension to managing our talent. It complements our usual approaches to training, development, compensation and retention and further asserts the incomparable value we place on our human capital.

Building Relationships that Create Value

We make every effort to effectively engage with our broad spectrum of stakeholders, map their expectations and ours to identify mutually important aspects and develop strategies and action plans that create value.

Investor relations received special focus during the year. It was a full calendar of activity across a multitude of channels including social media. We reached every segment of the investor community including institutional investors, fund managers and research analysts via meetings, webinars, investor forums, group engagement, road shows and more, across financial centres of the world including Singapore, Rotterdam and New York. There was an overarching purpose behind this.

The Bank ventured overseas and raised a total of USD 250 million in short and medium-term funding at competitive rates of interest from a diverse group of lenders from Europe as well as the International Finance Corporation of the World Bank Group. It was our first such significant foray overseas and a valuable learning experience that gives us the confidence to raise funds of this nature in the future as well.

During the latter quarter of 2014, the NDB Group launched the Emerald Sri Lanka Fund, which is the largest private equity fund dedicated to Sri Lanka. This completes the supply chain of financing solutions we offer to our customers, ranging from basic bank debt and pre-IPO equity to syndicated debt and IPO facilitation.

Pushing the Envelope

We said it was our best year last time when reporting on 2013. Well, we need to say it again this time as well. Year 2014 was one of solid performance in our core banking business as well as complementary businesses through our subsidiary companies, locally and in Bangladesh.

The Bank earned a profit after tax of LKR 3,418 million for the year under review as against LKR 7,723 million in 2013. Whilst on the face of it, this indicates a year-over-year decline of 56%, in actuality, the Bank's profit for the year grew by 64%, if the one-off capital gain earned as a consequence of the divestment of AVIVA NDB Insurance PLC is discounted. All segments of the NDB Group contributed robustly to fuel this result.

Group profit attributable to shareholders grew by 56%, crossing the LKR 4 billion mark to reach LKR 4,134 million (2013: LKR 2,642 million). This impressive growth was driven by enhanced performance from both our core banking operations as well as by the capital markets cluster.

The Bank's total assets expanded by 31%, nearing LKR 263 billion, setting ambitious growth targets for the coming year. Customer deposits increased to LKR 152 billion, a 17% growth compared to the previous year. Your Bank maintained sound portfolio quality with a low NPL ratio of 2.5% by year end. We have always championed the efficient management of costs and were rewarded with a cost to income ratio of 45% for the year. These performance indicators are well ahead of industry ratios of 4.8% and 52% respectively, based on industry data as at 30 November 2014.

The NDB Group has maintained one of the best Capital Adequacy Ratios in the industry and has benefited from a Capital Base that has grown in a steady and robust manner. The close of the year saw the Group's Core Capital Base rising to LKR 26,952 million, a 9% growth from end December 2013, while the Total Capital base recorded LKR 36,611 million, a 7% growth. This solid Capital Base strengthens your Bank's capability to expand its business operations sustainably to generate higher revenue, while being able to withstand any potential downside shocks.

If I were to identify the main drivers of such exemplary results, I would say it was the result of an agile management team coupled with a compulsion across all areas of the Bank to outperform our previous very best. It's what we call pushing the envelope - to move past the limits of what has already been done or whatever that is accepted as the current standard.

Maintaining a Balanced Scorecard

Going beyond financial performance, the Bank did well on many other fronts. We championed new product development in retail banking, deepened our portfolio in renewable energy financing, invested in technology to enhance productivity and customer convenience, opened our first digitized branch at the Kandy City Centre and ventured into private equity through a new subsidiary set up in Mauritius.

Our approach to corporate social responsibility is structured. The Bank’s strategic CSR activities during the year continued with ongoing programmes that covered education and healthcare. We partnered a novel philanthropic CSR project during the year to set up palmyra bio-fencing, initially on a pilot basis, to address the human-elephant conflict.

The Bank spearheaded a new national venture - 'Cinnamon to the World' - to revive the local export crop and over time, create a national brand akin to Ceylon Tea.

Our efforts did not go unnoticed. They were recognized through numerous global awards across the Bank and the Group and are summarized under Recognition section. While winning is not our ultimate goal, it does tell us we are heading in the right direction.

Going Forward

Ours is a strategy-driven performance driven by an engaged Board. The Bank’s medium-term Strategic Plan 2014-2018, developed in-house, provides the basis for alignment and direction across all business units. The Plan is systematically executed through a best in class ‘Strategy Tracker’, which provides space for feedback and corrective measures where necessary. Some of the planned activities are now on hold, on account of the ongoing merger discussions with DFCC Bank, a topic that is discussed in the Chairman’s Message.

We see 2015 as a year of opportunity despite the possibility of General Elections following the Presidential Elections of January 2015. Our twin areas of focus would be in accelerating the growth of current and saving accounts (CASA) to further improve our net interest margins and increasing the contribution from fee-based income as a proportion of the total operating income of the Bank. The above strategies will be ably supported by multiple initiatives relating to digital banking and electronic payments which will make financial inclusion a viable business proposition and become a strong anchor of the sustainability of our business model.

In conclusion, I would like to thank the Chairman and the Board of Directors for their guidance and counsel, all staff for their unstinted effort and commitment, our customers for their loyal patronage and all other stakeholders whose interactions with us we value highly. We bade farewell to our Chief Operating Officer Indrajith Wickramasinghe during the year. We are grateful for his contribution to the Bank and on behalf of all staff, I wish him well for the future.

It was an eventful year at the Bank. Ongoing activities were fine tuned, new initiatives were welcomed, while more ideas were under incubation. Change is indeed in the air. If I may paraphrase George Bernard Shaw, progress is impossible without change and those who cannot change their minds cannot change anything.

 


Rajendra Theagarajah
Chief Executive Officer

13 February 2015

Highlights of the year

Financial Highlights

BANK GROUP
2014

LKR ’000
2013

LKR ’000
Change

%
2014 

LKR ’000
2013

LKR ’000
Change

%
Operating results for the year
Gross income 24,961,945 29,656,420 (16) 26,204,626 25,303,305 4
Operating profit before tax on financial services 5,786,773 9,682,512 (40) 6,526,732 4,724,401 38
Taxation 2,368,709 1,959,276 21 2,378,034 2,061,393 15
Profit after tax 3,418,064 7,723,236 (56) 4,245,972 2,712,228 57
Profit attributable to shareholders 3,418,064 7,723,236 (56) 4,133,932 2,641,925 56
Gross dividends for the year 1,815,963 1,648,489 10 1,815,963 1,648,489 10
Revenue to government 2,241,816 1,764,828 27 2,272,691 1,871,263 21
Assets and liabilities
Customer deposits 151,823,715 129,830,029 17 151,485,201 129,421,813 17
Loans and receivables 180,500,550 141,650,632 27 180,561,253 141,710,813 27
Total assets 262,729,146 201,258,628 31 269,129,605 206,817,121 30
Total liabilities 240,490,954 181,638,150 32 240,331,186 181,455,467 32
Shareholders’ funds 22,238,192 19,620,478 13 27,875,773 24,513,806 14
Profitability (%)
Net interest margin 3.31 3.74 (12) 3.33 3.68 (10)
Cost to income ratio 45.53 31.16 46 45.59 48.18 (5)
Non-performing loans ratio 2.51 2.48 1 2.51 2.48 1
Return on assets 1.47 4.24 (65) 1.74 1.39 25
Return on equity 16.33 44.69 (63) 15.78 10.7 47
Total leverage (times) 11.81 10.26 15 9.65 8.44 14
Investor information (LKR)
Net asset value per share 134.70 119.13 13 169.35 148.85 14
Market value per share - as at 31 December 250.00 160.50 56 250.00 160.50 56
Earnings per share - basic 20.72 46.96 (56) 25.14 16.48 53
Earnings per share - diluted 20.70 46.95 (56) 25.11 16.47 52
Price earnings (times) 12.07 3.42 253 9.95 9.74 2
Dividend per share 11.00 10.00 10
Dividend cover (times) 1.88 4.70 (60) 2.29 1.65 39
Dividend yield (%) 4.40 6.23 (29) 4.40 6.23 (29)
Regulatory ratios (%)
Tier I - (minimum ratio of 5%) 10.09 12.05 (16) 12.92 15.15 (15)
Tier I & II - (minimum ratio of 10%) 14.68 17.87 (18) 17.55 21.04 (17)
Statutory liquid asset ratio
DBU 23.85 26.22 (9)
FCBU 25.18 26.06 (3)

* The financial highlights for the year 2013 include a one-off equity income earned by the Bank amounting to LKR 6,031 million.

Financial Goals and Achievements

Goals Achievements
Financial indicators - Bank 2014* 2013* 2012 2011 2010
Return on assets (%) Over 1.6% 1.47 1.14 1.94 1.50 1.52
Return on equity (%) Over 18% 16.33 14.38 21.17 15.01 13.47
Growth in total operating income (%) Over 20% 19.00 11.55 31.00 15.45 (5.41)
Growth in profit after taxation (%) Over 25% 64.00 (29.00) 60.00 31.52 (6.30)
Growth in total assets (%) Over 20% 31.00 23.00 18.00 31.61 8.00
Dividend per share (LKR) Over 10.00 11.00 10.00 15.00 7.50 8.50
Capital adequacy ratios:
Tier I (%) - Minimum requirement 5% Over 8% 10.09 12.05 11.14 9.98 12.72
Tier I & II (%) - Minimum requirement 10% Over 13% 14.68 17.87 12.38 11.26 14.76

* The above achievements are presented excluding the one-off equity income of LKR 6,031 million for the year 2013.

Highlights of the Year from a Stakeholder Perspective

2014 2013
Investors Total shareholder return (%) 63 31
Market capitalization rank at the Colombo Stock Exchange 16 20
Customers Growth in number of deposits and advances accounts (%) 17 19
Number of customer touch points
- Branches 83 78
- ATMs 83 74
Employees Total number of employees 1,744 1,583
Average hours of training per employee per year 7.7 7.9
Employee attrition rate (%) 6.6 4.9
Business partners Number of correspondent relationships 64 62
Government Taxes paid to the government (LKR million) 2,241 1,765
Community Donations (LKR million) 12.5 14.4

Operational Highlights

The sole global awardee at The Banker’s Financial Inclusion Award 2014 held in UK, for the Cinnamon to the World project

Successfully raised USD 200 million via syndication loan facilities, to be infused primarily to the SME sector of the country

Opened the Bank’s first ever digitized branch at the Kandy City Centre

Euromoney magazine of UK picked NDB Investment Bank Ltd. Sri Lanka & NDB Capital Ltd. Bangladesh as top winners for investment Banking in the respective countries in 2014

The Bank was the awardee for Excellence in Core Banking Technology at the 5th Annual Retail Banker International Asia Trailblazer Awards

Group operations expanded with the launch of The Emerald Sri Lanka Fund, the largest private equity fund dedicated to Sri Lanka