National Savings Bank demonstrated robust performance during the first half of 2019 amid subdued macroeconomic and market conditions, and witnessed Profit Before Tax (PBT) of Rs 4.3 billion, a growth of 15.5% compared to corresponding period of 2018.
The Bank recorded a Profit After Tax (PAT) of Rs 2.3 billion, an increase of 15.2% over the same period last year, despite the loss of With Holding Tax (WHT) on government securities amounting to Rs 1.3billion during first six months of 2019 over the same period 2018 due to removal of WHT benefit with effect from April 1, 2018. Also, additional tax of Rs 832.7million 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 October 1 on wards. The Bank has contributed Rs 4.8 billion to the Government in way of taxes and levies during the period under review.
Total income grew by 6.2% to Rs 59.1billion whilst total operating income observed a growth of 15.3% to reach at Rs 15.1 billion. Net Interest Income (NII) which contributed to 90.9% to the total operating income grew by 10.9% to reach Rs13.8 billion 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 Rs 499.2 million benefited from increase in business volumes. Net gain on trading amounted to Rs 663.9 million during the period under review, growing significantly against the loss of Rs 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 December 31, 2018 to reach Rs 1.1 trillion supported by growth in customer deposits. Customer deposits reached to Rs 907.8 billion, increased by 8.1% over the end of December 2018. Net loans and advances also rose by 5.7% to Rs 447.8 billion 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 January 1,2019. Thereby, a sum of Rs 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.
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