National Development Bank PLC's operating income for the first quarter of 2020 rose by 11 per cent to Rs. 6.6 billion while post-tax profit grew by 27 per cent (compared with the 2019 quarter) to Rs. 1.7 billion, the latter result partly due to tax removals introduced by the Government.

But the bank cautioned that there are significant challenges ahead for the banking sector as a whole in view of the COVID-19 pandemic and its impact on business, the economy and the community at large.

In a media release on Wednesday announcing its first quarter 2020 results, the bank said its balance sheet expanded by 4 per cent to Rs. 553 billion compared to the same 2019 quarter.

Commenting on the year ahead, the bank's Director/ Group CEO Dimantha Seneviratne stated that the economic toll from the COVID-19 pandemic will further deepen in the coming quarters and remain for years ahead.

'Whilst the full financial impact stemming from same on the bank is yet to be estimated, the bank remains committed to provide relief to all affected customers along with the debt moratorium, loans at concessionary rates and other means introduced by the Central Bank of Sri Lanka,' he said.

'We will revisit our business model, revise future forecasts and realign strategic resources in pursuit of sound returns delivered to all our stakeholders in the coming months and beyond, whilst placing digitization at core,' the CEO added.

The release said that the blow from the pandemic came in less than 12 months since the Sri Lankan economy plummeted due to Easter Sunday attacks in April 2019. The combined effects of all this has caused tremendous impact on every sector in the economy with distinct impact on the banking sector as well.

Total operating income which consists of Net Interest Income (NII), Net Fee and Commission income, income from financial investments, Forex profits and other operating income increased by 11 per cent YoY to Rs. 6.6 billion. The significant increase in other operating income to Rs. 835 million was attributed to exchange gains on the revaluation of the foreign currency reserves of the bank.

This was due to the depreciation of the Sri Lankan Rupee in early 2020 - due to COVID-19 pandemic related economic outcomes, in comparison to the appreciation of the Sri Lankan Rupee in the comparative period in 2019.

'The impairment charges for loans and other losses for Q1 2020 was Rs 1.3 billion, a 53 per cent increase over the comparative period. The increase in the impairment charges was mainly due to the increase in the collective provision charge in line with the growth in the loan book. The bank also accounted for provisions at individual levels considering elevated risks due to stressed market conditions, which are being reassessed with COVID-19 related stresses,' it said.

© Pakistan Press International, source Asianet-Pakistan