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NDB 3Q earnings fall 21% to Rs. 2.77bn

National Development Bank’s Group earnings fell 20.9 percent year-on-year to Rs. 2.77 billion in the September quarter, as lower net interest income and fee earnings outweighed an impairment reversal.

Profit attributable to shareholders declined from a restated Rs. 3.50 billion a year earlier. Quarterly earnings per share fell to Rs. 6.40 from Rs. 8.09.

At bank level, net profit fell 8.9 percent to Rs. 2.89 billion from Rs. 3.17 billion in the corresponding quarter of 2025. It also declined from approximately Rs. 3 billion in the preceding quarter.

The bank’s quarterly net interest income dropped 11.5 percent to Rs. 7.97 billion. Interest expenses increased 22.9 percent to Rs. 16.09 billion, outpacing an 8.9 percent rise in interest income to Rs. 24.06 billion.

Bank net fee and commission income was broadly unchanged at Rs. 2.13 billion, while total operating income declined 12.3 percent to Rs. 10.51 billion.

An impairment reversal of Rs. 417.8 million, compared with a charge of Rs. 1.41 billion a year earlier, cushioned the earnings decline.

However, quarterly operating expenses increased 8.5 percent to Rs. 5.33 billion. Profit before income tax fell 2 percent to Rs. 4.29 billion, while income tax expenses rose 16 percent to Rs. 1.41 billion.

At Group level, quarterly net interest income declined 11.2 percent to Rs. 8.05 billion, while net fee and commission income fell 8.1 percent to Rs. 2.54 billion.

For the nine months ended September 30, Group profit attributable to shareholders increased 33.7 percent to Rs. 7.60 billion from a restated Rs. 5.69 billion. Bank-level net profit rose 51.4 percent to Rs. 7.71 billion.

The nine-month improvement benefited from lower impairment charges and a smaller fraud-related expense. The bank recognised a gross fraud charge of Rs. 2.6 billion, relating entirely to the first quarter, against Rs. 4.5 billion attributed to the comparative nine-month period.

Excluding the fraud impact, bank net profit would have increased about 21 percent to Rs. 9.1 billion from Rs. 7.5 billion, according to its performance commentary.

Nine-month impairment charges fell 48.4 percent to Rs. 3.04 billion. Bank net interest income declined 2.2 percent to Rs. 25.38 billion, while net fee and commission income increased 14.1 percent to Rs. 6.58 billion.

Deposits grew about 1.5 percent from end-2025 to Rs. 717.47 billion, while net loans increased approximately 1 percent to Rs. 599.73 billion.

The current and savings account deposit ratio declined to 20.7 percent from 23.9 percent at end-2025. The nine-month net interest margin narrowed to 3.6 percent from 4.1 percent for the full year 2025.

Loan quality improved, with the net Stage 3 impaired loan ratio declining to 3 percent from 3.8 percent at end-2025. Provision coverage increased to 65.4 percent from 59.1 percent. The final forensic assessment put the fraud loss at approximately Rs. 13.64 billion, compared with the previously disclosed Rs. 13.58 billion.

The bank’s Common Equity Tier 1 capital ratio declined to 9.5 percent from a restated 11.3 percent at end-2025. Total capital adequacy remained at 14.8 percent. Both remained above applicable regulatory requirements, according to the filing.