Financial Times

NDB group’s profit before tax soared to Rs 2.3 billion in the first quarter of calendar 2006 from Rs 399 million in the previous 2005 period due to gains from the sale of the NDB-connected stake in Eagle Insurance.

The profit attributable to shareholders is Rs 1.5 billion against Rs 227 million in 2005. “This exceptional increase was due to Capital Development and Investment Company (CDIC) making a capital gain on the sale of 58.44% of it’s holding in NDB Finance Lanka (Private) Limited (the holding company of Eagle Insurance Co Limited) shares to AVIVA International Holdings Limited in February 2006. This sale generated a profit of Rs 1.64 billion to CDIC. Consequently the NDB Group through its holding of 75.6% in CDIC, made a profit of Rs 1.24 billion during the first quarter. Further on February 2, the Bank purchased a 5% stake in Eagle Insurance Company Ltd from James Finlay and Company (Colombo) Ltd, raising the Bank’s effective holding in Eagle Insurance Company Ltd to 32.42%,” the group said in a statement.

NDB Finance Lanka (Private) Limited was accounted as a subsidiary company during last year and upto 31January 2006 and as an associate company thereafter. The core banking business continued to make steady progress during the period. The loan book of the bank increased by Rs 2.5 billion mainly due to vigorous expansion in the commercial bank activities. The net interest income increased by 45% over the corresponding period last year. The gross lending portfolio of the merged Bank increased from Rs 34 billion to Rs 37 billion, an increase of 8%. The non performing loans improved from Rs 1,591 million as at 31 December 2005 to Rs 1.2 billion as at 31 March 2006.

Staff numbers of the merged bank increased from 486 to 655 over the comparative period reflecting the increase in branches and the expansion of the commercial banking operations.