National Development Bank PLC (NDBN0000) Earnings Call Transcript & Summary

Hello, everybody. Good morning, ladies and gentlemen. And good afternoon to those who have connected from Thailand and the other [indiscernible] countries. We are sorry for the slight time over. So welcome to the investor update for quarter 3 of 2022 of National Development Bank PLC. The setup for todays webinar will be a be similar to the format we have followed thus far. Director, CEO of NDB, Mr. Dimantha Seneviratne will take you through our prepared presentation at the end of which he will open the forum for questions and answers. At the Q&A forum, we invited to use the chat option, please remain on mute throughout. So on those notes, over to CEO. Thank you.

Good morning all welcome to NDB's quarterly investor webinar. Welcome all of you. And with me today, we have the leadership team that's Perera Sanjay, who's heading Personal Bank and Customer Experience; Deepal, Chief Operating Officer; Suvendrini, Vice President, Finance; Niran, Vice President, Treasury; Indika, Vice President, Middle Market; Ishani, Vice President, Project Finance; Vinoj, Vice President, Wholesale Banking; Zeyan, Vice President, Branch Network and Retail Products; and Damitha, System Vice President, Digital Banking. They are all here with me, probably they'll join during the panel discussion if there are any questions. And with that, let's move in the presentation. This is a slide about NDB, of course, we have been banking for 42 years, operating fully fledge commercial banking services, with also group presence in all the finance industry. And as you all know, we have been doing quite well. We have been winning several awards and this year, probably the highlights are the Best Bank award from Euromoney and also the Best Bank from Global Finance of USA. And I mean, this is followed by The Banker U.K. Best Bank award. So these have been recognized and as the most awarded bank. And let me now go on to is about how the operating environment we had over the last 9 months. You all know the challenges that we all had in the last 9 months. The table below shows how the policy rates have trended, especially from January 2022 from SDF rate of 5.5% within a space of 7 months, the SDF right was increased to 14.5%. So that itself was a big increase, 900 basis points, and so are the SLF rates, which went up to 15.5%. And we all know the depreciation Sri Lanka had unprecedented level of inflation going up to about 80%. September, it was 73.7%. And I'm pleased to see that in October, the inflation level has come around to 70.6%. So we are hopeful that it would be -- we have reached the tip of the inflation level and then there will be a downward trend, especially driven by food and energy prices, which are the major drivers of the inflation. So one challenge that we faced was naturally the coming out from the COVID challenges. But in April, May, we all experienced a lot of challenges after the country declared that we are unable to service our debt, the country downgrade to [ SD ] rate. And all that led to a curtailment of several funding lines and also the inflow of foreign currency, which led to weaker reserves, and that led to political unrest and a lot of public disturbances in terms of managing our day-to-day lives, [ world ] shortages, cash shortages, the medicine, essential food and all. So that was the environment that we had to basically face and the banking sector had to take the brunt of these challenges. And in that scenario, I would say that the entire banking sector as they can [ reassess ] the responsibility to ensure that the essentials are supported. You all must be knowing that I think the entire export, net exports and also the remittances banks continue to fund and support Central Bank in selling about 25% of all our export earnings to Central Bank to ensure that there's a pool that is created to ensure that the country's essential imports are funded. So that is how we have overcome from the challenges that we had in April, May. And we are hopeful that the IMF relief program would come out soon. With high interest rates, longer it gets delayed, the problem would be bigger. So we are hopeful that the board level approval is expected in December, especially the credit delever agreement signed soon. So that would have that restructuring happening soon. So this is the background that we were operating. Some signs of improvement that we have seen the rate of interest, we have seen that though it was going up. There are certain controlling measures that the Central Bank has also intervened, and that could also shows a reduction in interest rates, both in deposits and subsequently on the lending side. Even the liquidity ratio, how that has been calculated, there has been new circular issued on Friday, so that could also ease up some of the liquidity pressure the system is going through. And also on the inflation side. The signs of reduction in inflation that is the financial performance for the 9 months. In terms of income and profitability, we had 35% year-on-year growth for the 9 months. On the top line, the operating income, we had -- we completed LKR 31.5 billion, a 35% increase, but this was offset by a significant impairment charge that we took more than LKR 22 billion or if year-on-year 234% growth mainly due to the deterioration in the credit of the loan book, precautionary provisions, plus also our investment book, both in rupee and dollar side. The precautionary provisions that we made with the indications of country rating downgraded to selected default situation and the restructuring discussions that were going on. So as a result, the pretax profitability for the 9 months dipped sharply by 91% to LKR 790 million year-on-year and the post-tax profitability we ended up in recording LKR 561 million, the gain a 90% drop compared to the last year, 9 months. But I think some of the key items on the positive side, what I want to highlight is the income growth, the gross income growth of 62% in a situation like this, despite all these challenges, maintaining that shows that the fundamentals are strong. The bank has that ability to drive this. It's only these impairments that have been having hit our drag which we would believe would be a temporary situation till we come out -- till we come out from these uncertainties. Then on the net interest income, 39% growth and fee and commission income. We all know that for 6 months, we didn't have that opportunity to do trading business, the exchange income. That was one of the key drivers of the banking system. But because of the current situation, the changes, the liquidity, especially in the foreign currency side, those who are not there. But despite that, the fee and commission income, we had 10% growth. But the profitability got moderated due to this significant impairment that we had to take. In terms of the balance sheet, total assets, we had 16% growth. So we closed at LKR 820 billion by September, partly driven by the steep depreciation of the rupee as well because the dollar assets in our book valued. So converted to rupees there was a depreciation impact as well. Gross loans and receivables, we crossed LKR 600 billion, again, 14% increase. And also more importantly, the deposits that crossed almost LKR 650 billion, 18% increase. So our deposit growth rate was much higher than the lending rate growth in deposits compared to 14% in the loan book. So there is about 82% impact in the balance sheet growth coming from the depreciation, all these numbers mainly driven by the depreciation as well because we held our balance sheet, we didn't grow much in the second -- especially the second quarter and third quarter, we didn't grow much, given the environment, but things beyond our control in terms of the rupee depreciation also resulted in this growth. In terms of group performance, the group companies contributed profit of LKR 641 million. Year-on-year, that's about 89% growth and the total group assets now stand at LKR 825 billion. In terms of KPIs, the net interest margin improved from 3.25% in 2021 to 3.78%, more than 50 basis point improvement there. And the impaired loans, Stage 3 ratio has gone up from 4.55% in December 2021 to 5.75%. This is actually reflecting the downturn of the economy, the low negative GDP growth, all that reflected in the loan quality. Capital, of course, while the minimum ratio is 8.5%, Tier 1 capital as of September, we reported 9.42%. There was no need for us to tap the capital conservation buffer, though the regulator has given that option for all the banks. There was no need for us. And the total capital ratio, whilst the minimum was 12.5%, that has actually reached 13.6%. In terms of liquidity, again, the liquidity ratios improved, though that number is not here, the ADR ratio, by September, overall ADR ratio, advance deposit ratio improved to 94%, and especially in the rupee side, we were always maintaining more than 100% ADR ratio of our rupee side. However, in September, that got reversed and now we are below 100% in terms of rupee ADR as well. So one key measure of the strength of a bank is measured through the capital adequacy and also the how liquid you are. So both those fronts, NDB has shown that we are very well capitalized. So we will receive these -- the current challenges, not using the capital conservation buffer, but almost 100 basis points higher than the minimum requirement. And in terms of liquidity, liquidity ratio is improving. That also shows that the bank is liquid and strong to manage challenging situation like that we are going through. In terms of financial performance, this is the accumulated 9 months ending September 2022 versus 9 months last year. Again, you would see that gross income level, 62% growth or LKR 28 billion growth, interest income against 68% growth year-on-year, LKR 26 billion growth. Interest expenses, on the other hand, has gone up by 89%, mainly driven by the steep increases that we mentioned earlier, almost 900 basis point increase in the policy rate that were reflected in the deposit rates. And the entire market also had liquidity constraints. So entire market deposit rates also moved very fast compared to our adjustment in the loan book. And naturally, any bank would have a mix of variable interest rate as well as a fixed rate. So the change in the fixed rates that naturally is a challenge. So all in all, still the net interest income, we had 40% or 39% growth from LKR 15 billion last year to LKR 22 billion this year. In terms of fee-based income, that again, I mentioned 10% growth for the 9 months. And you should also remember that of that 9 months, we had almost 6 to 7 months where it was quite a big challenge in even supporting because of the dollar liquidity challenges the entire country faced with. Plus natural drop in volumes, we all know that the imports were curtailed, the policy decisions in terms of curtailed in the imports, restrictions on those. Now these are the usual trading items, trade income, that gives trade income to any bank. So that got also impacted. But despite that, having a 10% growth is, I would say, that's quite good. Then the other non-funded base income, we had 47% growth. So the total non-fund based income, fee-based revenue, we had 27% growth from LKR 7.3 billion to LKR 9.3 billion. So all in all, the operating income level, we had for 9 months, 35% growth, LKR 23 billion to the LKR 31 billion. And as I mentioned, our net interest margin improved and reflecting that we have been repricing our assets and are also working on the margin side. Now, this is the -- we had the huge impact. You would see the impairment charges for the quarter more than, I would say, a 3x growth a 234% increase from LKR 6.6 billion in first 9 months last year versus 92 -- sorry, LKR 22 billion, that's substantial. So these impairment charges includes the provision made for foreign currency-denominated government securities that we hold and also the loans to customers especially the largest portion coming from the foreign currency denominated government securities. We have basically made those impairments based on the industry norms that we have agreed, along with the Chartered Institute and the banking sector and the regulator. So that is in line with the market. Then the prudent loan provisioning that we made, especially with the interest rates going up to 30%. Some of the customers are coming out from the moratorium. So naturally, there would be a tendency for high nonperforming loans. So proactively, we have been building that provisions up. So that's part of the business, the cycles, economic cycles, come and go. So how you manage that or manage and strengthen that, how you might operate that's where a bank can come out from these challenges soon. In terms of KPIs denoting the asset quality, impaired loan ratio increased from 4.55% last year to 5.75%, again, reflecting the negative growth rate in the country and the -- which is resulting in the credit quality, people coming out from the impairments, their inability to settle. All that are reflected here. Then the impaired Stage 3 to -- the Stage 3 loan ratio, that is basically how much of your Stage 3 loans have been impaired. That has improved from 32% in December last year to 34.66%. So this is a ratio that we have been consciously building up to ensure that the impairment cover would be sufficient for any eventual credit pluses later on. Another key element is how you manage operating costs, and that's where I think NDB has scored quite well. Our overall increase in operating expenses is only 10% despite the impression hitting 70% plus and all our costs going up with the depreciation, even the IT costs related costs et cetera all going up. But despite that, I mean, even during the crisis, the height of the crisis, we have been providing transport services to our staff more than 12 buses deployed. With all those still we managed to curtail the operating expenses at 10% especially on the personnel expenses, only 3% increase from LKR 4.2 billion to LKR 4.3 billion. Again, cost comparison as a percentage from 55% last year, let's say, come down to 51%. Depreciation, of course, that you have no control and other expenses mainly all the admin expenses, depreciation and investments all -- they are about 23% increase. But all in all, 10% growth in operating expenses, and we have recorded one of the best cost-income ratios, again, less than 30% cost-income ratio. So that is something we give credit to the efficient level of how we operate and also the digital technology that we have deployed in process automation, productivity enhancements that we did and also optimizing the staff cost, current staff redeployment, all that in a challenging year to manage the cost and these sustainable cost savings, sustainable arrangements would continue. And that is one of the key areas even going forward, how NDB would be driving benefits even coming years, coming months, because more you're nimble, more you're efficient, you should be able to get the best out of. So that's one area that we have been focusing over the past 1 year or even prior to that, and we would continue to do that to manage our cost and be more efficient. So this is about the balance sheet. At a very high level, I did mention 16% growth in overall assets mainly driven by the depreciation as well from LKR 700 billion to LKR 819 billion. Investments, again, 21% growth, that's, of course, consciously investing in the treasury bills and funds. Now wherever the loan growth is curtailed, the excess funds are deployed there. Gross loans, 14% growth and gross deposits, 18% growth. Borrowings, marginal growth. And total equity, again, improved by about LKR 3 billion, about 5% growth year-on-year. So our balance sheet remains strong. Liquidity position is quite strong and cost of funds, which are relatively good. You have seen the NIMs improving. And most likely, going forward, we would ensure that this balance sheet is protected. We may not grow as we used to grow in the past, because the environment is not conducive for that growth. We are talking about another negative GDP in the coming year as well. So one has to be cautious. One has to be also protective of where we park our assets. So that would be a conscious growth that we would have even in next year. And this is the financial performance, the investor ratios. Naturally, the closing price has come down substantially, closed at 43 in September. Earnings per share substantial drop, again, reflecting the drop in the profitability to LKR 1.97; ROE, 1.24%; ROA, 0.14%. These are very, very low numbers compared to what it was mainly driven by the huge impairment charge that we had to take. Book value remains around LKR 160 and price to book again, 0.3, reflecting the market sentiment. So these are basically the investor ratios, the book value per share, one reason for drop is basically the increase in the shares issued through the scrip dividend that was issued in March this year. So in terms of capital and liquidity position, again, much above the regulatory minimum Tier 1, regulatory minimum is 7% we are at 9.42%. Again, capital ratio, 9.42%, again. And total capital ratio, whilst the minimum requirement is 12.5%, we are at 13.6%. Now this is without drawing the capital conservation buffer, as I mentioned. Statutory required liquid ratio remains -- there again, minimum is 24% DBU and 24% offshore, both these 22.8% as at September. Now it has improved further. And offshore, we were maintaining about 25%. And the overall liquid ratio, while the regulatory minimum is 90%, we have actually topped 208%. So quite liquid in terms of the regulatory ratios. Liquidity coverage ratio, again, 158% compared to regulatory minimum of 90% and net stable funding ratio 123% versus 90%. So we have been always maintaining high liquidity and keeping all the regulatory ratios much above keeping a level above that -- above the minimum that has been said. So this is my last prepared slide. The way forward, of course, a couple of things that the industry is looking forward to a direction in terms of debt structuring, the level of debt structuring, along with the IMF relief package. We are hopeful that the creditor level agreement can be reached soon. The Paris Club as well as the non-Paris Club bilateral creditors. And with that level of IMF Board level approval so that the first tranche can be released along with that first tranche, there are some bilateral other lenders who have been lined up with some funding. And more importantly, thereafter, probably first quarter or second quarter next year about the level of debt structuring that needs to be agreed with the commercial creditors. So that is something that we are looking forward to. But all these impairments were in line with expectations on these discussions, still a lot of uncertainties. So that's why the industry has taken a cautious approach without knowing what this debt structuring would ultimately be. So we would have much more clearer picture, hopefully, by second quarter. So till then, the banks would be building up these impairments as a precaution. Then the impairment provision building is critical to base for any potential loss coming from these debt restructuring. Another key area that we are covering is preserving the credit quality of the lending book. That's where we had to be proactive. Customers coming out from the moratorium. Some are coming out in December. But more importantly, understand what their challenges are, what their problems are and providing solutions because most of these customers have fallen, not because of their fall but naturally because of the economic downturn and the conditions that we all had. So we had to actually protect them, support them and hold hand. Some of them are not financially literate. So that's where the education, that's where the experienced bankers coming and helping them. So we have already set up a remedial unit within our business lines to take care of these customers, who needs more assistance, more guidance, and that's proactively what we can do as banks, and the NDB has started already that one. Then the other key area is cost rationalization and revenue management to preserve the profitability in a challenging year ahead. So especially on impairment charges, we all know that taxes have been raised, which is the need for the country. Again, now you should also remember that this is on top of LKR 2.5 billion that we have paid on the super gain tax earlier this year. So that, again, directly going out from the capital. But despite that, that's the need of the hour, that's part of the country needs. But being ready by being more efficient and managing our cost rationalization. Then again, the cautious growth in the loan book, again, protecting the capital. Now we have been making high capital ratios. But when you grow, you need to also ensure that you grow in a very capital-efficient product. So some of those capital inefficient products, we may not grow especially in a weaker credit environment. But we would be concentrating more on capital efficient product. And key priorities would be naturally preserving the asset quality in challenging environment, supporting customers to maintain the resilience, that's where the remedial unit and more relationship banking, hand holding, all that comes into place here and also being liquid all the time, being above the minimum liquidity ratios and keep ourselves liquid. Liquidity is a key area for any bank to concentrate on, and we will be concentrating on that. And also preserving the capital and have a capital augmentation plan when the market conditions improve, hopefully after the IMF restructuring program is announced. That's the time that banks should go and launch the [ TAP ] capital for the next phase of growth. Country needs stronger banking systems, and we are getting ready to ensure that when country picks up our growth momentum from mid of next year, we are strong enough to support that growth. So that's the way forward. And with that, we have come to an end to a prepared presentation. So myself and my team is here, and it's now open for you all to post your questions. We are quite open. Please post your questions through the tab, and we would be looking at those questions, and we'll take answers. Thank you.

There's a question that NDB particularly has net increase around 37 in employees, but gathering from industry, we are hearing many leaving, how was NDB able to retain and grow employees? What are you seeing from the staff in the running quarter and what steps the bank has taken to manage this? I think these numbers as at September, still we see staff turnover increasing. That's the entire industry is faced with that actually young staff, they're also looking for their career opportunities, and most of them moving overseas as well. So we are also impacted by that. But how we manage this, basically, we always had a pool of staff also, but that pool we may have to let go and be more efficient, deploy -- redeploy staff, there may be staff in some of the areas that we are not growing, probably reallocate them to areas that we want to grow. So it's a matter of how you manage all that. There's a question, what are the dollar balances, the bank holds with foreign counterparts? And are there any unpaid dollar debts of the bank? No, we don't have any unpaid dollar debts. We have settle all our dollar debts, we are quite current on that. And we have very few loan settlements that are coming up in next year. This year, we don't have any loan settlements but not a big amount. There's a question about Tier 1 capital of the bank has increased by around LKR 3.6 billion, while the total equity on the balance sheet has come down due to loss on the quarter. What are the reason that the Tier 1 capital increase? And usually, profit loss will be recognized on Tier 1 when the statements are audited and banks tend to do the auditors on second quarter and fourth quarter. It is the same for NDB Bank. So we have basically revalued our assets and auditors have confirmed the capital, the revaluation reserves and all auditors have basically confirmed. So with that, only we had taken that into capital. That's why the capital ratio has improved. What is the bank's exposure to the condominium sector, can you get a sense of the level of distress in that sector? We don't have that much of a significant exposure. We don't have major exposure there. Can you get a sense of the level of distress in that sector, anything you want to share, Ishani?

So basically, there are one or two facilities we just dressed. But if you look at it as a proportion of the sector, I don't think we have much exposure. So that's not a stressed in terms of as a sector for us.

Okay. There was a question, I witnessed the staff costs only increased by 3%, while inflation is about 60%. Is this demotivating the staff and leading for higher staff turnover? I would say that bank realized the stress level, with especially the inflation going up. So starting from end of July, we have made certain adjustments as allowance to the staff. So that has also helped to support in some way, but certainly not the level of inflation. So those in line with the industry, the HR fraternities, having discussions about what level of increase for the staff that we have to work on because the staff are getting hit from both sides. One is the inflation side and the other one is the high tax rates that are coming up from December. The total tax rate is going up from 18% to 36%. So we are working actually with the HR fraternity among the all banks to work on what's level of increments. But this 3% increase in staff cost is mainly due to the cost efficiencies that I spoke of by rationalizing the staff and also getting the efficiency levels up. And we have given so many other areas for the staff to manage their time in terms of working from home, flexihours, the transport arrangement that we have provided. All that has also provided and also the level of some of these are the overtime costs and all. When the level of activities are coming down. Naturally, those costs also would come down. So that's, again, one reason the rate of increase is not as high as the inflation way. So there's one question about any plans to raise capital? Then there's another question about ISP positions, expected recovery price, expected losses. Probably I'll ask Niran to cover that question. And then there's another one on tourism sector. What is the trend for the credit quality? So I'll take the first one and the last one and probably Niran can talk about what the ISP expect that recovery price and all because they have been -- we have seen some movement in the secondary market prices as well. So in terms of plans for raising capital, I did mention our capital ratio has improved to 9.5%. There's no plan for us to use the capital conservation buffer that the regulator has announced. I think this question has come from Tony Watson, Far East Investment Management Hong Kong, one of our shareholders. So there is no plan for to raise capital at the moment. However, when the situation improves, once IMF correction is approved and we see market situation getting better than what we are now, we would certainly go for capital ratio. I think I did mention in my presentation that right now, the challenge is to preserve the quality of the capital and also the balance sheet. But there would be a time where we need to grow the balance sheet. So that's the time. So most likely second half, we may have to tap the market for the capital raising. So that's the plan. With regard to tourism sector, we had seen that most of tourism companies are coming out from their moratorium now. But some good positive news is that almost all of our customers have indicated that they are booked. Their level of orders have improved. They're expecting a good turnaround. Some are even booked till April this year -- next year. So that's one good positive thing, overall NDB's exposure to tourism is around 4%, 4.5%. Of that, we have almost 1% in Maldives, which is speaking very well and doing very well. So we are talking about 3%, 3.5% exposure to tourism, which are under management. Most of them are in the corporate side, where we had seen the customers are coming out from the challenges, some [indiscernible] business banking or the semi side, they also have shown improvement, but some of them need some support. So that is what is supported through the remedial unit that we have set up. With regard to ISP, Niran, our Treasurer would give some inputs.

As per the current situation, of course, I think all the banks will wait for the understanding of the IMF and the bank, Central Bank on account of Sri Lanka budget whether there has been a restructuring to take place and what sort of a [ hard ] cut the banks may take overall. . But at the same time, I think even we have given certain solutions also with the local banks can be treated differently from the international markets and also probably whether if there is going to be any hard cuts whether we can absorb that portion in rupees because we have to take certain amounts in rupees as well like the [indiscernible] treatment at the Central Bank's doing for the [indiscernible]. So that will -- a lot will depend on that. But at the same time, I think if we look at the markers. There is some kind of improvement in the prices over the last 1 week, we have seen prices increasing about LKR 0.30, LKR 0.29 from the LKR 0.20, LKR 0.22. So that also is a little positive from what it was.

There's a question, will the bank look to convert any basel debt into equity? What has to happen in order for that process to begin? I think we are nowhere near that and there is no need for us to even look at the basel debt converted to equity. There's another question. How does the bank intend on increasing its liquidity in the occasion of an increase in liquidity requirement? So actually, there is no increase in the liquidity requirement that Central Bank has also looked at the recent direction combining both dollar assets and the rupee assets combined together and have it rupees, which would ease off some of the liquidity pressures that the banking system is like right now going through which is a good development. So that would also help the current liquidity to improve and the reduction in the interest rates. But in terms of how we increase our liquidities mainly through more granular deposits. Our retail network is quite strong and approaching these customers. Plus also, we have the transactional banking unit who is working on more transactional accounts being with us. And through that, supporting the supplier financing or the dealer financing, all that it's a combined solution that we give. It's not simply the deposit holders and only the lending book, the branches and also the entire network. Operations have been given directions about how we get more transactional accounts into the bank, and that is an approach that is really working well. So we will continue to focus on that to improve on our liquidity. There's another question about the reason for declining risk weighted assets for third quarter? And what is the current risk weighting for ISPs are SLDBs and government securities. Suvendrini, you would like to answer that?

So the reason for the decline in our WA is actually, we are deploying our assets in risk-efficient capital-efficient products. So therefore, naturally test improved. And in terms of risk weight for SLDBs and ISP, we are following the guidelines. And as per that, it's 20%. And on the local debt or local government securities, it's 0 risk weighted.

Somebody asking some industry related to answer this, so there is a talk of a local bankruptcy law in the press. Is this a concrete proposal with any real development. I know, anyone? Anyone? Okay. Anyway, banking industry, I mean, I'm not aware -- so -- but anyway, if the bankruptcy law is introduced, which is a good development for the industry right now, the commercial boards and all take longer periods or different banks have used different, different approach to get the recovery process faster. So if the bankruptcy law is going to get introduced, that's a good -- the industry will welcome such a move. Okay. There is a question, would it be possible to get an idea of the proportion, exposure of lending that is related to state-owned banks? So we don't have -- it's basically 0 that we don't have any lending to the state-owned on banks. There's a question, Niran. How has the T-Bills and T-bonds mix change from 2021 levels and how many bonds and bills our bank is holding now? How many, I don't know the number, quite a big number, but you want to give about how the bills and bond mix change from 2021 level?

Actually [indiscernible], as the CEO mentioned that stuff the [indiscernible] book is not growing as fast as we used to see, whereas the bank -- but the -- because the mobilization is continuing. So most of the investor deal in treasury bills and treasury bonds. The mix also is somewhat we are changing because we're now looking at the taxes also the regulation, we might consider to increase from the current levels the portfolio deviation.

These are the questions. So these are the questions that we have received so far. There's a question, Suvendrini, what is included in the denominator exactly in calculating SLAR?

So SLAR is actually how much of liquid assets, a bank has over its total liability base. Yes. So total liabilities will include the deposits and borrowings and all that, so the SLAR has definite guideline. So in summary, it's your total liquid assets excluding the loan book over your total liability base.

There was a question earlier about the level of impairment for the ISPs and SLDBs? I just want to clear that we are in line with the impairment charge banks are taking in line with the discussions we had with the Chartered Institute and also in line with the banks -- all the banks, the industry that has taken, of course, a lower impairment for SLDB because the treasury has started settling the SLDBS in LKR. So all the banks, I think most of the banks have received in rupees, Sri Lankan ruppes. So that the level of impairment there is low. And our maturity on the SLDBs is also very less next year. In terms of the ISPs, again, that is in line with the industry impairments that we have agreed to. There is a question, Niran, again for the treasury. How has the interbank lending markets changed in the last few weeks that was mentioned that the government was looking to improve its function?

[indiscernible] mentioned is that we will try to improve the equity level in the market. So actually, we saw the last bond auction, I think they rejected the most part of it certainly the high days. So that money came into the market and also some of the treasury bills maturities also. And also, if you look at the today, I think we have seen a huge improvement in bond yields, specially the long-term has dropped by about [ 150 ] basis points. So as we mentioned earlier, I think it's like the inflation also has peaked. So we might see some improvements going forward. But as for the money market, I think that is the main reason because that money has come into the market from the Central Bank.

What's your opinion, again, Niran, there's a question, has the treasury bill rate peak? I wish I have crystal ball to answer that. Niran, you want to comment?

I think...

Niran is, by the way, one of the most experienced treasurer in the entire bank industry serving. So Niran, why don't you share -- his only -- his personal use, by the way.

So we feel that it's a peak. So that's why I think we have seen some easing off over the last week and also even from yesterday to today, the rates have come off. So let's wait and see after tomorrow's auction, -- so -- and also the continuity at the such high rates also will be very detriment to the country's economy. So we feel that the rates may drop in the coming probably we have seen the as the inflation also been .

Thanks, Niran. There's one more question, does Central bank pay SLDB outstandings in LKR without a delay upon due? Or is there any delay from the Central bank? Usually, they do pay maybe a couple of weeks to replace that. However, not a long delay, but they do pay the SLDBs. What is the OBU liquid assets for the latest reported quarter?

25% is the OBU LAR that is published in our financing.

There's the question. Are you doing any advisory services for the sale of distressed assets? How much is the [ Mount Lanka ] hotel sales [indiscernible]? We had hoped too on that. However, these were NDB investment bank actually would be playing an active role. Our government has announced several SOEs that are being restructured. This is part and parcel of what NDB investment bank is doing. So we would also get involved in those. Naturally, there will be other players as well. But that would -- I would say, an opportunity for the investment banking community to work on these SOE distressed assets and SOE restructuring programs. Right. Okay. So I think we have no other questions. So with that, we will conclude our webinar. Thank you very much for your participation. As always, it's quite good to have interactive session with the -- and we have been doing it every quarter without fail. So thank you very much for your presence and also asking so many questions. And thank you for my team and the finance team who have been putting this together. So looking forward to meeting you all again to a webinar like this in the next quarter. Challenging times, we are ready. We'll be working very closely with the Central Bank and our customers, especially, we need to take care of our customers. It's not only the financials that you guys are asking all the balance sheet, financial related question. But you need to also remember there's a huge set of customers who we have to look after, depositors as well as the borrowers. So as a responsible bank, we have to ensure that they all are heard of. They all are provided with solutions. So that's a role for us, while it's also ensuring that the bank delivers a good result for our shareholders. That's where the investment companies looking at. So that -- we would continue to do that. So thank you very much for all your questions. And please be with us even in next quarter. And follow us through your analysis and continue to have these interactions. Thank you so much.