The National Savings Bank (NSB) demonstrated resilience in 2023, achieving a Profit After Tax (PAT) of Rs. 7.2 billion. This accomplishment reflects the bank’s adept management and skilled workforce navigating a challenging economic climate.
A key driver of NSB’s success was a strategic investment approach. The bank capitalized on higher interest rates in 2022 by allocating over 60% of customer deposits to government debt securities. This resulted in a significant 36% increase in interest income, reaching Rs. 137.7 billion. Additionally, interest received through loans and advances grew by a substantial 36.3%. Net gain from trading also witnessed a remarkable surge, rising by 206% compared to the previous year, shifting from a loss to a profit of Rs. 3.7 billion.
However, NSB encountered headwinds in the form of subdued loan demand due to high-interest rates. This led to a 34% decline in net fee and commission income. Moreover, the bank’s interest expense rose by 41% year-over-year, exceeding the growth rate of interest income. This rise stemmed from the cost of funds, particularly fixed deposits, which constitute 81% of NSB’s deposit base. The lag effect of liability repricing further limited the positive impact on net interest income.
Despite these challenges, NSB maintained a strong asset quality. Impairment charges decreased by 12% compared to 2022, and the bank boasts one of the lowest Impaired Loans Ratio (2.41%) in the industry, significantly lower than the industry average of 7%. Personnel and other expenses increased in line with global inflation, rising by 17% and 16% respectively. Consequently, Profit Before Tax (PBT) decreased by 5% to Rs. 4.3 billion.
NSB’s strategic asset allocation enabled growth in its deposit base by Rs. 5.8 billion and its investment portfolio by Rs. 62.4 billion despite the low loan demand. The bank’s total asset base also reached Rs. 1.7 trillion, reflecting a 4% increase from the previous year. NSB generated a Return on Equity (ROE) of 9.36% and a Return on Assets (ROA) of 0.26% (before tax) in 2023.
The bank’s capital adequacy ratios remained well above regulatory requirements. The Common Equity Tier 1 Capital Ratio stood at 15.3% (minimum requirement – 7%), exceeding the industry average of 13.4%. Similarly, the Tier 1 Capital Ratio was 16.9% (minimum requirement – 8.5%), surpassing the industry score of 13.8%.
In conclusion, National Savings Bank delivered a commendable performance in 2023, showcasing its ability to adapt and thrive in a complex economic environment. The bank’s strategic investment approach, focus on asset quality, and robust capital position position it well for continued success in the future.