RETAIL BANKING | Cesar Tordesillas, India

Sri Lanka's NSB posts 16% deposit growth

The National Savings Bank recorded a 16% deposit growth in 2011, with its deposit base surpassing the Rs. 400 billion or US$3.2 billion mark.


The Sri Lankan bank aso exhibited asset growth, profitability achievement of a number of milestones, expansion of the branch network, re-launch of core products and winning of local, regional and international accolade.

“The entirety of the bank's activities focused on one goal financial inclusion, which is evident in the wide reach of branch network, the add-on products and services as well as CSR activities. With 24 new branches opened during the year, the bank concentrated more on the rural areas. The bank also saw the opening of its 200th branch in Medawachchiya and counted 210 branches by the end of 2011,” said H. M. Hennayake Bandara, GM/CEO.

The NSB's total assets were up by 16% to Rs. 466 billion at December, 31 2011 compared with Rs.404 billion at the end of the FY 2010.

The increase in total assets reflected 25% growth in loans and advances to customers reaching Rs.87 billion against Rs.70 billion at the end of the FY 2010. As a wholesale lender, the bank's corporate lending portfolio recorded a significant growth of 168% to Rs.33 billion in the FY 2011 compared to Rs.12 billon at the end of FY 2010.

The government securities portfolio recorded a growth of 15% to Rs.289 billion in FY 2011 from Rs.251 billion in FY 2010.

The net interest income marginally increased by 2% to Rs.16.9 billion in 2011 compared with Rs.16.6 billion for the year ended December 31, 2010.

The decrease of interest income from government securities investments due to re-pricing at lower rates is the main reason for lower growth in NII and decrease of lending rates due to competitive pressure on lending pricing. However, strong growth in corporate lending and lending to customers contributed to maintain the NII at current level following the reduction in the cost of deposits during the first nine months of 2011. As a result, Net Interest Margin declined to 3.9% for 2011 compared with 4.4% in 2010.

Hennayake further said that the bank's capital position remains strong and well above the Central Bank's required minimum level of 10% with the total capital adequacy ratio at 17.1% as at December31 ,2011 compared with 19.2% at the end of 2010.

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