National Development Bank PLC, Sri Lanka’s Premier Financial Services Provider, announced the results for six-month period ended June 30, 2025 reporting a total operating income and pre-tax profit of LKR 22.3 billion and LKR 8.6 billion, respectively (H1-2024: LKR 22.9 billion and LKR 6.5 billion).
Fund based income
Net interest income, which accounted for over 75% of the Bank’s total operating income, amounted to LKR 16.9 billion for the semi-annual period; rising 2.7% over LKR 16.5 billion in H1-24.
This was notwithstanding the sharp decline in interest rates where the one-year government Treasury Bill yield fell to 7.9% at end June, 2025 from being close to 10.3% at end June, 2024.
NDB was able to maintain its Net Interest Margins broadly at 4.0% levels (2024: 4.3%) which, excluding items of a one-off nature, was 4.2% on a like for like basis (2024: 4.4%).
At end June 2025, the Bank had close to LKR 50.3 billion in Loans and Deposits under a special arrangement with its customer(s) with a netting-off feature (end 2024: LKR 19.6 billion).
Non-fund based income
Net fee & commission income grew by 8.4% to reach LKR 3.6 billion whilst, the second quarter alone considered, it was an impressive 20.8% quarter-on-quarter growth; underlining the conscious and diligent efforts made to improve its overall contribution to income from non-funded sources.
Growth in net fees stemmed from almost all aspects of its core business operations.
Credit and operating costs
Impairment charges of LKR 4.5 billion for the period saw a 46.7% YoY reduction from LKR 8.4 billion in the same period of 2024, attributable to greater focus of the Bank on improving credit quality.
This took the Bank’s total impairment coverage ratio, excluding such one-off items of a special nature, to 8.7% (end 2024: 9.6%); which compared well relative to the industry average at the said period end.
Operating expenses totaled LKR 9.2 billion - which, whilst increasing by 14.8% over H1- 2024 - stemmed primarily from staff related routine increments and realignments to the industry, and higher investments in IT infrastructure and those of a direct business development nature.
Investor key performance indicators
Return on average equity was 10.6% down from 12.2% in 2024 whilst Annualized Earnings per share was LKR 19.65 down from LKR 21.25 for 2024.
Respective ratios at the Group level were 10.8% (2024: 12.5%) and LKR 21.23 (2024: LKR 23.05), respectively.
The Bank’s Pre-tax return on average assets was 2.0% (2024: 3.1%).
Net asset value per share was LKR 186.81 (2024: LKR 186.91) and compared with a closing share price of LKR 120.25, which posted a 6.2% appreciation since end 2024.
Group Net asset value per share was LKR 199.37 (2024: LKR 199.13).
FINANCIAL POSITION
The Bank’s total deposits amounted to LKR 696.1 billion at June 30, 2025 (end 2024: LKR 631.7 billion, 10.2% growth) whilst net loans expanded to LKR 557.0 billion (end 2024: LKR 460.7 billion, 20.9% growth).
Excluding transactions of a one off and special nature, this represented a normalized absolute net growth of 5.5% and 14.9% over end 2024, respectively.
The Bank’s CASA ratio on a normalized basis was 25.0% having improved from 22.5% at end 2024; ultimately reflecting the Bank’s conscious efforts to improve its low cost funding.
The Bank’s Impaired loans (Stage 3) to total loans ratio was 5.1% (end 2024: 5.2%) which compared well with the industry average.
Its Stage 3 provision coverage was 53.4% (end 2024: 54.5%) which also was close to the industry norm.
LIQUIDITY AND SOLVENCY
Liquidity levels also remained strong with the Bank’s Liquidity coverage ratios, across both Rupee and All currency, being 330.9% and 253.8%, respectively at June 30, 2025 (end 2024: 358.1% and 308.3%) and its Net stable funding ratio being 124.5% (end 2024: 152.4%) - all of which were well above the minimum regulatory requirements of 100.0%.
The Bank’s solvency levels as measured by CET1/ Tier I and Total CAR were 12.3% and 16.6%, respectively representing a strong over 5.0% buffer over its regulatory minimums from a CET1 perspective and over 4.0% buffer from a Total CAR perspective (end 2024: 13.7% and 19.1%).
OTHER NON-FINANCIAL INDICATORS
The branch network stood at 113 branches, supplemented by an ATM network of 60 and cash recycle machines (CRM) network of 106 spread across the island.
Total staff as at the end of the period under review was 2,882 (2024: 2,920).
Commenting on the results for the first six months, the Bank’s Director/ Chief Executive Officer Mr. Kelum Edirisinghe stated that:
“Our results are testimony to our diligent, conscious and concerted effort to improve every aspect of our business whilst taking every measure reasonably necessary to strengthen our overall risk guard rails on a continuous basis.
Supported by the continued positive progress of the Sri Lankan economy - albeit several macro level headwinds stemming mostly from the global economic landscape - we are very pleased to witness the resurgence of much of our customers across retail and all business segments.
With customer-centricity at the heart of our every endeavor, we focused on delivering impactful support across all our client segments to enable them move forward in this emerging environment.
For us, the first six months of this year marks many milestones.
Amongst them all, one standout is our continued contribution to the SMEs in the country and one which is best reflected in our loan book crossing the LKR 100.0 billion mark and accounting for close to 20% of our total loans - a feat we are very proud of! NDB’s recent recognition as Euromoney’s Best Digital Bank for SMEs for the year 2025 provides further testimony to the success of this focused effort to serve this crucial and determinative segment of our economy.
Looking ahead, our focus is clear.
We will continue to leverage on our deep rooted knowledge and experience in understanding customer behavior better, use our digital capabilities to create greater ease of access and use the diverse skills and capabilities of our staff at both a front end and back to adopt and adjust to an ever evolving business landscape in order to ultimately better enable us create sustained shareholder value over the longer haul.
Conscious of also the challenges which may lie ahead, we remain confident of the Bank’s continuing trajectory of growth in its core banking operations and realizing its vision for the future sooner rather than later”.
Photo Caption Left to Right Mr. Kelum Edirisinghe - Director, Chief Executive Officer and Chair, Board of Directors Mr. Sriyan Cooray.