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

Hi, everyone, from National Development Bank PLC. Thank you very much for connecting with NDB Bank's Investors Webinar for the results of the first quarter for 2023. Today's webinar will follow the same format like our prior webinars where the Bank's Director and Chief Executive Officer, Mr. Dimantha Seneviratne will take you through the prepared presentation. At the end of the presentation, he will open the forum for questions and answers, at which point he will be joined by the senior management of the bank. [Operator Instructions] Thank you, and over to you, CEO.

Okay. Good morning and probably good afternoon for those joining from Far East. Welcome to NDB Bank's quarterly investor webinar, updating our first quarter results. So with me, we have the members of the leadership team, Sanjaya holding the Retail Banking; Deepal, the Chief Operating Officer; Suvendrini, Chief Financial Officer; Niran, Vice President of Treasury; Indika, Vice President, Business Banking; Ishani, Vice President, Project Finance and Corporate Credit Control; Vinoj, Vice President, Corporate Banking; Zeyan, who is heading our Branch Network and the Retail Products; Bimal, Vice President, Strategy; and Damitha, Vice President, Digital Financial Services. So they are with me here. So let me take you through the agenda. So it's about the corporate profile and the operating environment and the financial performance for the first quarter 2023. Then we will have the way forward for the industry and on all. And finally, we leave time for usual Q&A session. I'll be repeating but there is very high level 40 years -- 42 years actually in operations in NDB with 113 branches, we provide a full gamut of commercial banking activities. Staff, now less than 3,000, it was earlier more than 3,000, but less than 3,000 now. And the key area that we are focusing is on the digital drive and about 85% of our transactions are routed to digital channels. And that is one area that we have been investing and that has also helped us to get our cost income ratios down and provide more holistic solution to the digit platforms to our customers and other key advantage that NDB is having as the group companies who are also in the investment banking, corporate finance and the wealth management side and also on the stock broking. So It's a -- quite a well coverage financial proposition that we offer to our customers. And also we are quite highly rated in terms of the people management, The Best Place to Work and also the diversity, the 40% of our staff are female, the only edge qualified financial institution or corporate in Sri Lanka, rather gender, equalities, maintained well. And we have been winning several other awards last year, especially the Euromoney Award, Best Bank in Sri Lanka and Global Finance Best Bank Award, the Banker award in 2020. And very recently, we were awarded as the Most Awarded Corporate in Sri Lanka by LMB, this is for the second consecutive year. Last year also we were the winners as the Most Awarded Corporate, this time with more than 95 awards as the best corporate in Sri Lanka. So getting back to where we were in operating environment and all it is to recap and share with you all. I think we were operating under a tremendous volatile operating environment last year and this year also no different, but things are getting better in terms of having financial sanity. So -- one key area is the inflation where we had seen inflation coming down from a high level of 75% in September and to a level of 33% in April, the latest numbers were released over the April, 33.6% in CPI and CCPI, 35.3% and the expectations are this to come further down and hopefully to a single-digit level by the year-end, of course, at a higher base, but I think that's a good sign that we have out from the peak level. Then on the exchange rate, we have seen rupee appreciating against the dollars, which is again a good sign. We saw in the first quarter itself about 10% appreciation of the rupee from a high level of LKR 367 in December. Now -- if you take the appreciation up to now, it's about more than 15% appreciation from a high level of LKR 367 in December to now hovering around LKR 306. So that's actually a good development in terms of bringing the cost of living down for the Sri Lankans and also ensuring that sometimes overheated exchange situation is getting corrected. We all had a lot of foreign currency liquidity challenges last year. But I think that's -- we were one of the first bank to come out from that as well, and we start helping the customers. Now the liquidity situation has improved. Foreign cash liquidity in the market has considerably enhanced. A couple of reasons. One is the demand in imports have come down, basically with some of the controls that we introduced, but we have seen those controls are gradually getting lifted and government also have indicated that by June, most of these controls would get lifted. The cash margin requirement was taken out very recently. So that is one reason. But I think, again, apart from that, the overall people spending capacity also has come down. So as a result, we being an import-dependent country that, that demand has come down. But on the other hand, the export side kept on supporting the country, the much-needed dollars. So that -- there can be impacts going forward as the global demand is coming down, slowing down. So we see most of the export has also seen the orders getting gradually cut down. We hope that it is temporary but as of now, the exchange situation, the foreign currency situation has improved. This also supported by the worker remittances that have improved year-on-year and also the recent improvement in our tourist arrivals. During the first quarter, the Central Bank also increased the policy rate so that the gap between the market rates and the policy rates to narrow that gap. So we saw 100 basis point increase in first quarter. Then also, we saw a gradual decline of the interest rates along with the inflation rate and then also there is premium associated with the structuring concerns. As you can see on the policy rates, 15.5% SDFR and SLFR 16.5%, Statutory Reserve Requirement still remains at 4%. The improvement in the market rate is quite volatile, as you can see, the last table down there on the right-hand corner -- bottom right-hand corner, Q1 2022, 365-day T-bills are going at 12.28%. Now it peaked -- financial year-end it peaked to 29.7%. And then Q1 this year is reduced by about 500 basis points to 24% and further reduced as of now to 22.79%. An AWPLR similar trend that was noted, one of the lowest in Q1 2022 at 9.47%, this before the announcement of the country's default. So that was the Q1 last year, but then went up to 28.19% at the end of the year and then now at 21.8% and slightly lower than that as well. So this basically reflect the volatile environment that we have operated. The NII is one of the key -- actually, that's a key income source for the banking sector and the volatility sometimes it helps, but the overall industry has seen improvement in NIM. Another area that we are waiting is on actually the restructuring and the finalization of the creditor arrangements. Of course, the IMF relief program was approved, which is again good relief for the country, and Sri Lanka also received the first tranche of $333 million under the extended fund facility arrangement. And the next one is due in September. I think prior to that, we need to ensure that all the credit level support is -- they are in place for us to go for the second tranche but that has stabilized, and we also have seen a lot of queries coming about potential investors, potential financiers now that Sri Lanka has entered into the IMF program knowing that there will be a discipline. And we see on the political side as well, the support to ensure that the developers are, actually, we meet their targets. So that's a good trend compared to what it was. So that's actually a good one for us to look forward to. So going to the banking sector highlights in Q1 2023, we had seen marginal growth in total assets at the industrial level and most banks, however, recording a decline in the loans and receivables. One is the lack of demand with high rates and other key reason is probably the capital pressure for the banking sector with the rupee depreciating steeply last year. The capital ratio has got impacted because the capital ratio is not getting fees, whereas different banks, the level of foreign currency to rupee mix is different. And when you have dollar-based assets, naturally, that's getting repriced at a depreciated rupee to as your capital lease in rupees. So that's one reason for the capital reduction. The other key reason is a significant impairments that all the industry has taken, one on the government investments itself on the foreign currency denominated investments, plus the deterioration in the credit quality, substantial recreation 4 years, almost 4 years, especially that were in some industry 4 years under moratorium since the [indiscernible] and all the others were under moratorium for 2, 2.5 years. So all of them, the moratoriums are relaxed only in December. So now the customers are -- actually, we see quite interest taken by the customers to negotiate and get into the restructuring arrangement. But still, the credit quality is stressed, and that has also impacted on the capital levels. Deposits, we saw a moderate growth trend, again, naturally with the inflation going high people's capacity to invest, people's capacity to save has got it basically affected. We saw the CASA ratio also coming down, substantially down. I think the industry-wide CASA ratio is about 29%. Last year, March, same time, 38%. So again, 38% to 29%, significant drop in CASA ratio. And that also reflects people's capacity to save but still a moderate growth in a deposit we saw. And in the first quarter, the capital level has slightly improved, the entire banking sector, thanks to the appreciation of the rupee, so that the -- what I explained earlier, that actually impacted last year reversed a little bit. So the dollar assets are now valued at a lower dollar to rupee conversion ratio. So that has said, capital ratios slightly improving from what it was last year. And probably, the banks also consciously reduced asset book when I say asset book the loan book, which is restricted at a higher rate than the investment in the [indiscernible]. So all that has helped to improve the -- on the capital ratios. Credit quality in the industry, we have seen the quality of loan book still deteriorating industry Stage 3 may be around 13% as at April and that situation is the one that we need to work. We need to work closely with the customers, understand their pain points and work with them closely to support. On the other hand, the liquidity side has differently improved both local currency, Sri Lankan rupee and also the other currencies, both the liquidity levels have improved, especially the foreign currency and also the LKR industry wide, we have seen a good improvement in the liquidity. The profitability -- we had seen industry-wide, the profitability coming down due to the effect of high impairment being built up and also the reduction in interest margin because of the volatility that we saw. And -- the other one that the banking industry is awaiting is on how the -- all the debt of the government, debt restructured, foreign currency and the local currency. There are some clarity provided by the Central Bank and also Ministry of Finance earlier. But more we get into the discussions with the creditors, there will be intense discussions. But hopefully, these have to be finalized by at least end of June, so that some therapy is provided on the that how the rate debt is optimized, how the debt is treated, especially the debt held with the banks, because that clarity would cut down these high interest rates that are going for the -- especially the bonds. There is a premium naturally that -- ideally if the clarity is provided that premium would come down and that would also help governments debt holding us. So moving on to the bank's performance. At a very high level, this first quarter, the income and profitability side, the gross income has grown year-on-year by 75%. This is first year -- actually 2022 first quarter versus 2023 first quarter year-on-year growth of 75%. That's commendable, given all the challenges. So top line, they had grown and also in the net interest income, again, 38% year-on-year growth by -- to LKR 8.5 billion. Now here again, despite the cost of deposits have grown significantly. I think with the timely repricing, et cetera, we have managed to get NII growth of 38%. Net interest -- sorry, net operating income also had 24% year-on-year growth to LKR 4.5 billion. And as a result, the pretax profitability was LKR 1.4 billion. So it's again 45% growth compared to last year. And then the post-tax profitability was LKR 805% billion, 33% growth. In terms of the balance sheet, this balance sheet is compared with the year-end 2022. So from December 2022 to March 2023, a 6% growth in the balance sheet. And then we locked at LKR 782 billion. Gross loans -- sorry, it's a reduction -- sorry, it's a negative growth of assets, mainly driven by a loan reduction. Again, that was a conscious reduction because these are the repayments of the customers mainly, but we were consciously not growing the book because one is the demand is also lacking. Other thing with high rates, it would be a challenge for us to go and grow the book. So therefore, we were concerned on managing the quality of the book. So as a result, the entire balance sheet, both deposits and advances we had negative growth. Even the deposits also had a 6% negative growth due to this reason. I think partly the appreciation of the rupee also contributed to this, especially from December to March, you all saw a 10% appreciation. So deposit declined by 6%, partly due to the appreciation of the Sri Lankan rupees, the growth was curtailed. In terms of KPI ratios, net interest margin, 4.01% slightly improved than 4% last year. But still there is room for us to improve on this, which we are working on. Then on the impaired loans, Stage 3 ratio, it is 7.3% versus 6.24%, slightly deteriorated. Again, a lot of plan to ensure that this area is addressed. Cost fee income is 33%. This is an area that we have been working very hard. The digital platforms, all that helped and that we are relatively better again here in the cost income ratio. Tier 1, that has improved to 10.08% when the regulatory minimum is 8.5%. And then the total capital ratio almost 14% when the regulatory minimum is 12.5%. And LAR is 28% actually slightly higher than that as of now. So moving on to further discussion on the income statement. Again, 75% growth in gross income. As you can see, the interest income, we had 113% growth from LKR 15 billion last year same time to LKR 32 billion. So more than 100% growth there. However, the interest expenses, again, substantial growth from LKR 9 billion to LKR 24 million that's a 165% growth. However, since the quantum, actually, that has helped so that net interest income at 38% from LKR 6.2 billion to LKR 8.5 billion. So the area that we should concentrate and improve is naturally the interest expense side, where we had seen the 165% growth now that we are working on it. Of course, there were some reasons also for us to have more deposits taken, especially on the liquidity side because bank always took a very conservative approach in -- in a volatile environment last year to be liquid. So that was one of the key areas that we ensured that maybe have the impact of the profitability, but we still want it to be liquid. The ability and liquidity was important. I think I have mentioned that in previous 2 partly webinars as well the importance of being liquid. So that is reflected at a cost of probably the interest expense, but that's something that we are addressing in this year to improve further. In terms of non-fund income, again, net fee we had seen quite a good growth, LKR 1.7 billion last quarter -- actually, that's for the first quarter last year to LKR 1.9 million. Now this is where things should further improve going forward because the first quarter last year was a usual quarter before the government announced their inability service debt in April. So the imports, the fee side, commission were normal. But of course, the subsequent quarters, we saw a significant drop there. So when you're comparing normal first quarter last year versus, again, I would say that we are coming to normal now. Still there is a 13% increase in net fee and commission income. Other non-fund income, that's where the exchange impact has basically had a negative figure of LKR 1.1 billion versus LKR 2 billion last year. And in terms of non-fund base income, again, there's a reduction to LKR 760 million versus LKR 3.7 billion again first quarter. They are exchange-related gains, on the revaluation side, last year first quarter. So that is why a steep drop. So if you look at last year, first quarter. One is the revaluation gain in the exchange side, there was quite a substantial contribution for the first quarter. But this year we don't have it but despite all that, still the operating income, we are maintained at almost LKR 9.3 billion operating income level compared to LKR 9.9 billion. On the impairment charges, since this was a substantial figure, we thought that we should discuss this in detail. Of course, there's a reduction quarter-to-quarter, quarter -- first quarter last year, it was LKR 6.3 billion, which has come down to LKR 4.8 billion. Now here, though we see a reduction actually, last year, first quarter, mainly this impairment have come from building up of impairments for the government securities that we are holding in terms of foreign currency government securities. So that was substantial. However, this year, I think the bank has made adequate impairment for that, which is in line with the normal in the industry's expectations and also in line with the -- our auditors expectation. So there was no pressure for us to build up impairment related to the foreign currency government holdings. So instead, what we did was we basically -- and also especially the appreciation of the rupee also helped us in having some of these impairments being available so that we can basically use that cushion to build up conservatively the impairments on the loan book. So -- but still, there is a year-on-year reduction there. And then on the KPIs denoting the asset quality, the impaired loan ratio from 6.2% that December, it has still gone up to 7.3%, reflecting the industry sentiment in terms of the credit quality. But importantly, the impairment cover -- Stage 3 impairment cover that has slightly improved from 37.4% to 37.6%. And in part with the total impairment cover, this is irrespective of which stage the loan is in compared to the loan book, the impairment cover from 5.8% in December last year. within 3 months, it has improved 7.2%. So that gives you some indication of the level of impairment buildup that we have been doing in the first quarter. So all in all, with all these large impairments, exchanging impact on all. The net operating income, we managed to get LKR 4.5 billion which is up by 24% compared to the first quarter of 2022. Analysis of the operating expenses, they are again from Q1 last year to Q1 this year, 9% increase in the personnel expenses. Again, I would say that it's well managed despite the offering sizable market-driven increments for the staff, but the efficiency of the staff and also the number of headcount all that have been managed to contain this growth in the personnel expenses to 9%. Of course, the depreciation and amortization beyond our control, those are relatively smaller numbers compared to the total operating expenses. The other expenses again, 23% increase from LKR 1.1 billion to almost LKR 1.4 billion. Now that's where we would continue to focus in giving it and going for a sustainable savings. We had seen good progress there. That is why despite inflation rates going up so much and the impact of the exchange also hitting us, especially the IT infrastructure and all like all the expenses are invoicing currency. But despite that, I think containing the operating expenses is also commendable. So total operating expenses quarter-on-quarter from last year first quarter versus this year, first quarter, 16% increase to LKR 3 billion. So all in all, as I mentioned, the cost income ratio, still we managed to get directly. This was low at about 25%, 26% last year. But because of the depreciation impact and also the reduction in the overall income levels, cost-income ratio deteriorated. But when you compare with the industry, I think still NDB at a better place in terms of the cost-income ratio. Moving on to the balance sheet. Again, a reduction in the balance sheet, which I explained earlier. So total assets from December LKR 833 billion to LKR 782 million, so LKR 51 billion drop in assets for 3 months alone, mainly coming from the appreciation of the Sri Lankan rupee plus a little bit of reduction in our loan book. However, the investments remains slightly LKR 10 billion more, 6% growth. So the reduction in the loan book, basically is reflected in -- probably a little bit of investment in the caries. So the loan book has come down around by LKR 580 billion to LKR 536 billion, so perhaps LKR 44 billion reduction. Similarly, the deposits also we saw LKR 43 billion reduction from LKR 672 million to LKR 629 billion. Borrowings remains the LKR 81 billion to LKR 72 billion again, a drop and the total equity has improved from 64% to 65%. So you can see that the balance sheet management is one of the key focus here. No longer -- it's basically with the balance sheet growth because one has to preserve the capital and how efficient you can manage this balance sheet and how efficient that you can get returns out of this balance sheet is the key and also the reduced economic activity appetite for customers that due to high interest rate, all that impacted. So the key here is how you manage your balance sheet well in a volatile environment. And I think we have been doing that well. I think whenever we saw that reduction in loan book even in last year, second half, and we continue to do that by deploying our assets in more return kind of assets and maybe curtailing growth in some of the areas and proper balance sheet management and especially the interest margin management that would basically be the story for this year going forward to improve on our efficiencies. So overall, the financial performance in terms of investors' perspective. Closing share price from December LKR 32, it has improved to LKR 44.9 as at March and in today, it's hovering around LKR 42, LKR 43. Earnings per share also has improved from LKR 7.65 to LKR 8.59. Group level, it is LKR 9.1, ROE from 4.75% to 5.07% and ROA from 0.26% to 0.7% pretax ROA. Book value, again, LKR 167 to LKR 172 and price earnings from 4.19x to 5.23. Naturally, the price to book value still remains low and similar to all the other stocks in the market, especially the banking stock from 0.19x to 0.26x. It's slightly improved because of the share price improvement. Based on the capital ratios, and that's where we had seen -- we have been working on, having our capital ratios improved, so that from 9.34% in December, it's improved to 10.8%. And Tier 2 level total capital from 13.35% to almost 14%. Group level, it is 14.46%. Statutory liquid ratio, again, despite minimum is 20%. We have been maintaining about 28% or even 30% as of now. And the liquidity coverage ratios are very much above the minimum requirements. And so I think not only the NDB, all the banks have been maintaining the liquid level, maybe exception -- 1 or 2 banks that are exceptions but we have been quite liquid, and the area that we have been covering is the capital side. So that's basically the in-depth presentation on the financials and also the balance sheet. And I quickly share some of our ideas about the way forward. So one of the key strategic priority is how to optimize on the balance sheet. So that's why now we are focusing on, especially we looking at the margins because when you compare with the industry, still our margins NIM are relatively lower. One reason probably is the foreign currency to rupee mix. But still, we feel that there is enough room to improve on the cost of funding. So that's something that we are working on to further improve on the margin. But on the previous income, that's an area that we have been focusing to enhance the revenue mix from the fee-based income. So that continued to be driven. Cost rationalization is also another area to enhance the shareholder returns. So we have been reducing our headcount, substantial reduction there as well. Thanks to again, digital processes that we have deployed. We have 14 robotic process automations that are working plus the workflows all that. The digital platforms how one is to help the efficiencies and also the cost of running. Those have actually improved. So that will continue to ensure that focus on the cost/income ratio side. Loan book growth would be very cautious. So we'll be -- our underwriting standards having basically further improved, and we would always look at the total margins at a credit can bring in not only on the interest income, but how risk efficient that asset is being booked. So the RORAC model is on return on risk base adjusted capital. That would be one of the key measures that we apply to ensure that whatever the loan book growth is profitable and above a certain threshold that we have internally set. Whilst doing that, I think customers being supported is one of the key area that we have been focusing on. During the first quarter, we also migrated to a new core banking system after almost 10-plus years. So we are now in the new platform. And now ready, actually, there are a couple of months in initially sorting out some of the teaching issues, et cetera. But now we are ready to provide that next level of customer support to ensure that a holistic solutions are provided while also ensuring that the liquidity portion is maintained and serving the capital and that's one other area that we have been working on. We have already announced our intention to raise unsecured subordinated, redeemable debentures up to LKR 10 billion. So those, I think we will be coming to the market and waiting for the right interest rate scenario also. One thing that we expect is that once this restructuring discussions are over, hopefully, by end of June, especially on the rupee side, how the domestic debt would be optimized, already Central Bank, the treasury has indicated some of the voluntary plans but more deeper that you go into those negotiations, whatever that level of domestic debt optimization, we need to get clarity and hopefully that clarity would be available by end of June, especially if we are going for the second tranche in September from the IMF. We need to have these agreements; all the creditor level agreements be in place. So once that clarity is provided in the current high premium that is driven on the govies, especially the government funds should come down. So we are hopeful that once the clarity is provided, a reduction in the interest rates as well. And I think that's where we can provide good -- better returns for our shareholders. So that's a little bit of way forward to all our investors. And I think with that, we conclude the presentation and now open up the portal for us to receive your questions, and then me and my team is quite happy to provide clarification.

First question on any comment on shutdown local DDR. I think -- that's -- we are also waiting some clarity on that. I think already government has given indications about their intentions with regard to the holding of the government -- sorry, in Central Bank T bonds. Apart from that, the T bills may not have any DDR concern. It's good to follow what's happening and we also await some clarity. So I'm unable to comment anything further. Probably Niran, anything that you want to add?

Actually, we are also, we made a [indiscernible] governance commits. So we also mentioned certain things that the [indiscernible] meeting. So we also guided by that because, so far, we have not been -- I don't think any of the banks have been reached by Central Bank or treasury also, people have to give any specifications [indiscernible] submission of the bond restructuring.

Okay, thanks. There is a question on how much has NDB provisioned on ISPs and SLB base. I think we have covered that in earlier presentation as well. In line with the market expectation and also in line with the -- what the -- our accountants or the external auditors have also agreed, the entire banking system has agreed on certain level of provisions. And I think NDB is all well within that provision slightly excess as well. And then the appreciation of the rupee also helps to improve on that provision cover. There is a question. Is it correct that the total banking sector capitalization need is in the range of $4 billion? Okay. I don't know from where that $4 billion number came from. But it all depends on what level of haircuts that government would finally agree with the sovereign bond holders and also to meet the GFM targets, debt to GDP ratios with IMF. What level of government spending have to be curtailed? So it's a lot of uncertainties as of now. But one thing that is raised that when the economy -- after all the restructuring and all are over, the economy has to pick up. And to support that economic revival, strong banking balance sheet is needed. So banks currently have about LKR 19 trillion asset base. Right now, well capitalized. But however, the impact of this restructuring and all can hit day 1 impact, and that's why the regulated forbearance may be needed. But more importantly, that regulated forbearance, probably the capital ratio wise there will be a forbearance. However, to grow, you need to have capital. And that's where the entire industry would require capital to support the next level of growth for the country to come out from these challenges and maybe next 2, 3 years, capital building is one of the key priorities for all the banks. So there again, all the banks going out and raising capital. Again, whether it's the right one, whether they assume for consolidation, all that are some of the questions that are there. So I'm not sure about the figure that you mentioned. But certainly, the capital ratios, our capital is needed for us to grow going forward. There's a question. Suvendrini, there is around LKR 0.8 billion increase in Tier 1 for this quarter is coming only from profits or is there any other additional deductions? Do you want to clarify?

So actually, we did not consider the profits for the quarter because we have to get it audited. How we have improved our ratio is with the balance sheet management and with the rupee appreciation and this has benefited the balance. So it's mainly to the asset management.

There's a question, Niran, on SLDB mature funds, sizable maturity in 2023 March quarter. Has this been guaranteed to pay in LKR or via bonds or what's the stance there? If there are no communication or payment regarding this sort of an impairment taken for this defaulted portion?

This -- the bond specialty, I think the Central Bank has stopped to [indiscernible] they stopped paid us yet because they are -- but they have indicated to us over the settlement that the settlement would be either in LKR or in Treasury bonds and they have got the banks consent also to extend it. So I think almost all the banks have consent. Even the [indiscernible] bond or in LKR. So [indiscernible] get to us again because currently, the [indiscernible] progress that they may not be issuing any [indiscernible] options for the time being. So there would be a delay settling the -- settling the SLDB outstanding. So they have not given us a time plan. And as for the impairment, as you mentioned, we have taken the market or the industry know and the external retails advise of the percentage that we pay. So that has been taken for the quarter end as well.

Thanks, Niran. There's a question on what is the loan growth rate for NDB for 2023. I think so far, there's a reduction in loan book. We are not expecting that much of a growth for the entire 2023. One is the -- when still there country's GDP's negative territory. Hopefully, the things should improve in probably the last quarter. One is the approach we had to be conservative, other one is the lack of demand, especially at high rates. So loan growth unlikely that this year will have a significant loan growth. Okay. So Aruna has shared link about the LKR 4 billion capital need, there is article. Thank you, Aruna. There's a question, is there any impairment already taken for local debts? If not, any potential uptake in local debt provisioning in near term? I think the industry so far has not taken any local rate impairment. It's sovereign and always the sovereign position needs that sovereign can basically service. So, so far, none of the industry players have taken local debt related impairment as far as I'm aware. There's a question, how profitability target has been revised in response to decline in loan growth. What is the [indiscernible] target? I am then unable to share what the [indiscernible] target is, but however, it's substantially higher than last year that I can confirm. But how we manage to get the profitability targets upward this despite the loan -- is loan book is not growing is basically how we efficiently manage our balance sheet. So that's why I mentioned interest margin is a key area and that's where there's a huge potential for NDB when you look at the market players and us, there a good gap of our pricing. So that's something that we would work on. Other one, it's on the fee-based and the exchange-based income that we are working on, plus also the investment on bond portfolio and all. I think the holding costs, our average returns are much higher than the industry. So these are some of the areas that we can really work on getting more profitability targets set despite balance sheet not growing. There's a question, Suvendrini. What is the base you've seen calculating NIM, is it the average of total assets or i.e.?

Yes. We discuss all the banks, I mean, they have been given publication guideline. So NIM is calculated while taking the average of the total assets. So it's the entire balance sheet. So the net interest margin on the balance sheet, the total assets.

That's another question on what is the investment portfolio mix, T-Bills and bonds as of 31st March? So I think our -- we don't have that much of exposure on bonds but more on bills. From which sector, the loan book and deposit contraction mainly coming from March quarter and expectation of loan book and deposit next quarter? I think, I addressed that question about the loan, we may not have that much of focus. But the sectors where the loan book is contracting probably construction is one key area naturally. And corporate and the business banking side, that's where we see contraction coming up. And also some of the exporters, the level of usage of export lines, the banking credit lines, the evolving lines, we see that's gradually coming down naturally due to lack of demand, again in global markets. So these are some of the economic cycles that anyone would go to. And I think the industry is quite used to these kind of drops and we have managed it in the past, but I think that's the other reduction in the loan book is coming from. There's a question on why it was there a reversal on other impairment foreign currency bond related impairment for the [indiscernible] is due to currency appreciation? Yes, that Is the main reason. However, we build up, I think I explained that despite the foreign currency appreciation release, some of the impairments, we consciously build up on the loan impairments. Okay. Last question. Nonfinancial, how has resignation of staff affected NDB? Is it severe or manageable? As I must say it's manageable. I think the entire industry has seen quite a high staff turnover. People are going overseas or as a result, vacancies being created so that either other institutions. But so far, NDB, we have managed quite well, very much under control. We have seen a reduction in staff numbers and some turnover levels. However, it's manageable. We continue to invest in people in terms of training, so that, that would also give opportunities for the others to move up to those positions since the trading side is quite strong. So we have been managing it so far well. These are the questions that we have received so far. There are no questions. [ Let it stop ] at 12:00. So we can conclude this. And once again, I thank all of you for attending [indiscernible] regularly every quarter, we have been having this, and thank you for your attention and all the questions and looking forward to meeting you all again in Investor Webinar. And on behalf of me and my -- and my team, thank you so much for attending this investor webinar. Thank you.