Thursday, October 22, 2020

NDB continues to struggle with profitability

National Development Bank (NDB)’s half year financial results for the year ended September 30 2016 registered a loss of P6.2 million contrasting the performance of the corresponding period in 2015 which recorded a profit of P2.4 million.  

For the reported period, net loans and advances decreased by 19 percent while loan interest income reduced by 17 percent, which as a result affected the bank’s performance. The bank’s total assets decreased from P1.568 billion as at September 30 2015 to P1.293 billion in 2016. The bank indicated that a turnaround strategy will be implemented so as to grow and improve the quality of the loan book, which is also expected to enhance return on investment. 

“The bank like other industry players experienced challenges with regards to increasing defaulters and tight liquidity. Further to this the bank had to ensure adequate data clean-up following the implementation of the new banking system,” stated Lorato Morapedi in the financial results report. 

The bank on the other hand indicated a reduction in expenses which it attributed to cost containment and improved efficiencies which were achieved through consultation, education and automation. The bank reported expenses which are lower by 25 percent than they were in September 2015.  

 “While the bank continues to show signs of recovery from a profitability perspective there is still a need to implement cutting edge initiatives to continue collecting from non-performing loans and enhance the bank’s asset quality,” Morapedi commented.  She believes that the interventions will improve the bank’s performance going forward. 

Meanwhile, the bank’s long awaited 2003 privatisation process was delayed so as to allow the bank to undergo commercialisation to ensure that a worthy asset is ultimately privatized. The bank said its current developments are potential enabler for more efficient banking through product development and improvement.

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