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NSB continues resiliency amidst challenges recording Profit of Rs. 7.2 billion

By: Staff Writer

April 15, Colombo (LNW): The National Savings Bank (NSB) said it demonstrated its mettle amidst challenges by recording a Profit after Tax (PAT) of Rs. 7.2 billion for the fiscal year ended December 31, 2023.

NSB said the performance in FY23 was a testament to its adept management and highly skilled workforce in a year which saw the aftermath of pandemic followed by largest economic crisis in post-independence history, and socio-political uncertainties and monetary tightening.

The Banks’ achievement of Rs. 7.2Bn PAT mainly surged by 31% increment of Interest Income. The Bank strategically allocated more than 60% of its customer deposits investing in Government Debt Securities capitalizing on the higher interest rates prevalent in 2022.

This prudent investment strategy yielded a substantial interest income of Rs. 137.7Bn which was an upswing of 36%. Interest received through Loans and Advances also grew by 36.3%, an increment of Rs. 23.4 Bn.

Net Gain from trading rose up to Rs. 3.7Bn at the group level which was a 206% increase from last year where they recorded a loss from trading. However, NSB was able to turn around the situation with professional due care and commitment, underscoring NSB’s adeptness in capitalising on market opportunities.

The Bank however, encountered challenges in net fee and commission income, witnessing a 34% decline due to subdued demand for loans and advances amid higher interest rates then prevailed. Fee and Commission Income was mostly contributed from Retail Loans and Corporate Banking. Both lines of business were clogged due to unwholesome micro financial conditions.

Exceeding the growth rate of Interest Income, the Interest Expense of the Bank also increased by 41% year-over-year (YoY). This rise in the cost of funds, particularly from Fixed Deposits which represent the largest portion (81%) of NSB’s deposit base, contributed to a congestion in the positive growth of Net Interest Income due to the lag effect of liability repricing.

Impairment charges of the Bank decreased by 12% in 2023 compared to the same period last year. The Bank closely monitors and considers the impact of the economy to business operations and performance.

In terms of Asset Quality, with all the obstacles, NSB has one of the lowest Impaired Loans (Stage 3) Ratio 2.41% (net of stage 3 impairment) compared to the industry rate of 7% at the end of fiscal year 2023. Further, the Bank maintains above industry impairment coverage ratio of 53.3%.

Personnel and other expenses were increased by 17% and 16% respectively being in consistent with inflationary situations globally. The Bank recorded a PBT of Rs. 4.3 billion which was a 5% decrease from 2022.

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