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

Good afternoon, ladies and gentlemen. Welcome to National Development Bank PLC's Analyst Webinar relating to its financial results for the period ended June 30, 2025. As the first order of business, please allow me to introduce our panel. We have our Director, Chief Executive Officer, Mr. Kelum Edirisinghe; our Deputy Chief Executive Officer, Mr. K.V. Vinoj; our Senior Vice President, Personal Banking and Customer Experience, Mr. Sanjaya Perera; our Vice President, Treasury, Mr. Damitha Samaranayake; our Vice President, Risk, Mr. Alex Perera; our Vice President, Strategy, Ms. Nadika Ranasinghe; and me, Vice President, Finance, Azzam Ahamat. Next, let me give you an overview of what our CEO will take you through. He will touch upon some of the macro trends that transpired in the 6 months that ultimately shaped our results for the 6 months period ended. And then in that context, give you a snapshot of the bank's performance and financial position as of 30 June '25. And then deep dive into some of the income statement balance sheet sides and also discuss, in the process, some of the key performance indicators, including and not limited to, covering solvency and liquidity aspects. Thereafter he will open the forum for Q&A, at which point you can raise your questions through the chat option. I must also say very kindly, make a request, during these proceedings, kindly ensure your video is switched off at all times and your device is on mute. And please note, these proceedings will be recorded and be uploaded on to our website in our Investor portal section for your later reference. So thanking you all in advance for joining us. And let me hand over to our Director, CEO, Mr. Kelum Edirisinghe for his presentation.

Thank you, Azzam and good afternoon, everyone and welcome to our first half investor webinar. The structure remains pretty much same compared to the previous webinars and I'll take you through some of the key highlights that shaped our first half performance. To start with just a key couple of macro highlights on interest rates, exchange rate and inflation. And I would sum it up by saying stable rates, steady currency and inflation is normalizing. All matrices are looking positive and will actually help for good growth in the months and years to come. So on our performance, just to take you through the highlights, I'll start with our profit after tax for the first half. And I think it's fair to say that the number that we reported, up some 31% over history is the highest that the bank has reported in its history. So that's a very strong positive to start with. And the other point to note here is that the profit is actually -- it actually comes from our core banking operations. meaning that it gives lot more consistency and predictability when it comes to our performance in the months and years to come. The other key notable achievement that you see here is our impairment charges. So it is down by some 46% and that also goes on to highlight the focus and the attention that we have paid to our credit quality and then the positive outcomes from that. And I would actually sum up that particular metric by saying that the trajectory is looking positive even for the next 6 months. On the balance sheet matrices, as the numbers shown here, our growth was reported at some almost about LKR 100 billion, up some 19% over history. There is a small clarification note in the next page, which I will take you through. But overall, it was a fantastic performance in the second half and actually we saw some of the growth coming in the second quarter and we expect that growth to actually continue. On the Business Banking side, again, I'm proud to present that growth or rather the size of the balance sheet has expanded to about LKR 100 billion. That again goes to show the commitment and the effort that we put in to grow that side of the business. On our Stage 3 ratios, it has now improved to about 5.1%, better than the industry and there's another slide that I will take you through. But as a data point, sector is at about 5.8% and we at 5.1%. On the liquidity and solvency ratios, I'm not going to necessarily read through all the matrices but just highlight by saying that we are well capitalized and we are very liquid and that also a strong point for us to look for future growth. In terms of the accolades that we won, just want to highlight that we won the award for Best Digital Bank for SMEs awarded by Euromoney. And we were also certified by Great Place to Work for the third consecutive year or for the third time. And that's again a positive to note and it also goes on to showcase what a good employer we are. Otherwise, our staff numbers and the branch network remain pretty much similar to what was reported last year. Just to highlight the note that we put into our results publication on the special arrangement on loans and deposit. This is actually something BAU, let me start with that. And what this means is it's actually commonly known as notional pooling, different organizations may use different terminology. But what it means is allowing the customers to borrow against their deposits. And so that's #1. The second point is that in this particular case, we have the deposit and the borrowing from the same currency. So there is no currency risk or currency mismatch and what the customer gets in return is the interest benefit. So the numbers have been reported on a gross basis and we have also made certain notes in the slide deck as well as in our results publication, showcasing the adjustments. Just to sort of talk to the numbers, the total pool we're talking about here, both on the deposit and the asset side or the loan side is about LKR 50 billion. We had a legacy book for about, say, LKR 20 billion or LKR 19.6 billion to be precise. So the growth this year alone and part of which actually came in the second quarter was about LKR 30 billion, just to put that into some perspective Diving a bit more deep into our income and profitability. As the numbers show, we were able to report a growth in NII. It's about 2.7%. It's granted that it is a bit of a modest growth but this actually comes on the back of a low interest rate environment. And when you look at the numbers that are already published by some of our competitor banks, I think the narrative is the same. On net fees and commission, there is a positive story there. We have seen about an 8% growth. We will take you through some of the numbers a bit more in detail in the next couple of slides. But overall, we had a relatively good quarter -- first half in 2025. More positive note to highlight here is on the impairments. Here again, impairments are down almost 47% at LKR 4.5 billion compared to LKR 8.4 billion. This is an area that we have paid a lot of attention to in the last couple of quarters or in 2024 as well, which we have discussed in detail in our previous results announcement. And I think we are now seeing a lot of positive outcomes as a result of those hard work that we have put in. On the net operating income side, we are up some 22% over history, settling at LKR 17.8 billion. So that again shows the strength of the underlying business. And finally, profit after tax settling at 31.7%, as I mentioned previously, at LKR 4.2 billion and our profit before tax at LKR 8.6 billion, up some 32% over history. I just maybe just want to highlight only on the cost factor -- the cost point that I missed earlier. This is in line with plan, broadly reflects the increases that we have granted to staff as well as establishment expenses, again, which we will do a bit of a deep dive in the slides to come. Coming to the P&L drivers on NII and the NIMs. As the numbers showcase here, on interest income, again, the 8% decline is actually a reflection of the market interest rates and that, again, is pretty common across the industry. But something more positive to note here on interest expenses. Again, we have been very diligent in repricing our deposit book. And if you look at in comparison to the growth in income, we were able to get a greater reduction in the expenses and thereby generating a positive income overall. So that's point #1. The second point I would like to draw your attention to is on the interest income when you look at the quarter-on-quarter performance. On -- compared to first quarter, the second quarter, we have actually seen an uptick, albeit it's been relatively modest. But when you look at both in context, our net interest income for the quarter was up some LKR 500 million compared to Q1. So that actually sort of sets a trajectory for the next couple of quarters to come. And this is also well supported by the asset growth that we achieved in the second quarter, in particular. Coming to NIMs, what we are showing here is 4% and that is also -- that just actually includes the special note that we mentioned earlier, which includes the notional pooling element. If that is discounted from the numbers, our NIMs would improve about 4.2%. You may also recall in our first quarter numbers, we saw our NIMs dropping well below 3% and we did mentioned to market that we have a lot of confidence in NIMs improving. And that is coming on the back of 2 things primarily, the repricing of assets as well -- the repricing of deposits as well as the assets that we were able to book in Q2. And looking into the future, we remain confident on the NIM levels. And as a target and we are looking at about north of 4.15% on a normalized basis and we believe that is very much achievable looking at our business model and the kind of pipeline that we have. On fund income, a couple of things to draw your attention to. Compared to 2024, we are seeing an increase in our fee income to about 8.4%. That's on a year-on-year basis. But probably what I will draw more attention to is the chart at the bottom. Two things to call out. Firstly, when we look at our first half performance in 2024 and quarter-on-quarter performance on both matrices, we're actually seeing an uptick and that is primarily driven by incremental business volumes that we saw in the first quarter and the second quarter. And this is actually lining up quite well for our -- for the second half as well. There are certain elements in terms of net gains from trading and I think that is relatively staying flat. We will look at the kind of positions and the risk that we want to take based on the market movements. And that is something that we do on a BAU basis. On cost and taxes, just a couple of call-outs here. On the impairment side, based on our focused efforts to improve the quality of the loan book and the impairment buildups that we have done in the past, we have actually see the impairments that we need to book tapering off. When you look at that in the context of 2024, our impairments on the loans and advances side is down some 40%. And as you obviously know, with there being no overhang on the ISBs, there is no requirement on the ISB impairments anymore. So that will not be a relevant point in the future. But there is a modest impairment that we have booked based on our investments in some of the foreign currency-denominated paper. So overall, again, a positive outcome on the impairment side, down almost 50%, 46.7% to be precise. But I think on a forward-looking basis, this is something that we are pretty comfortable with. And I'll again take you through some of the matrices, internal matrices compared to market to give a bit more color on that. On the expense side, again, on personnel expenses, we did have to make certain market adjustments first half and this amount that we are seeing here, [ 12.3 ], as a reflection of that. The other major driver is our establishment and normal admin expenses. And that -- those expenses are well within the budgeted numbers. So there is nothing -- no one-offs or no outliers. I think perhaps more importantly, when you look at the cost-to-income ratio, 2024 may not necessarily be a good comparison given some of the changes that we have done. When you look at the first half at [ 41.2 ], that is pretty much comparable with the numbers that are reflected in our peer group data set. When you look at the second half, generally given better growth prospect in the second half and some of the expense savings that we have planned, I'm very comfortable that this ratio would improve further. On -- in terms of tax payments, again, the banking sector continues to be a huge contributor to the government coffers and that will actually continue to be the case in the second half as well. So this chart gives a bit of color in terms of our income dispersion. The percentages of our income in terms of distribution across various expense bands and how we end up at a profit after tax level. I'm not necessarily going to discuss about each and every category. But if you look at broadly, based on our income earning, our profit after tax, the contribution to profit after tax is about 9% at the moment. But in terms of our future trajectory, what we are trying to look at is improving credit quality and having some savings arising from that. So our net saving or net contribution to the bottom line would increase as a consequence of some of those activities. In terms of balance sheet performance, I think there's a very, very positive story here. Again, given the focused effort that we put in to build our asset book, we have seen that translating into some quality assets. At a gross level, it is about LKR 97 billion, LKR 98 billion and discounting for the notional pooling or the special arrangements as we have discussed previously, it's about LKR 65.6 billion at about 15.9%. This percentage is well above the market and we expect this to continue for the second half as well given the kind of loan pipeline that we have and thereby ending at a very strong position in the second half. Just want to also look at some other matrices. In terms of the contribution, we now have a very balanced book, if I may call it, with Business Banking ranging at around 17% and PF accounting to about 24% and wholesale banking at about 40% and retail at about 19%. So when you -- when we look at the growth that we have put in, there was like a good balance that was generated across all 3 business lines, which is exactly what we want to drive so that the balance sheet and the P&L would remain strong for the rest of the months. On -- in terms of our deposit mix, so we have the foreign currency loan book at around 30%, with the LCY at about 70%. And this, again, is a reflection of our deposit book. We'll look at the deposit numbers as well. Again, it goes on to show the strong deposit franchise that we have, particularly on our PRV segment, where we have strong foreign currency deposits and this again gives us a very strong platform to build on a solid foreign currency loan book, which we have actually done in the first and the second half of this year. On the credit quality side, one notable improvement that you would see from this graph is how the red line is now coming below the industry benchmark. Sector is at 5.8% compared to NDB's 5.1%. So that again goes on to show the efforts that we have put in to improve our credit quality and the outcomes of that. In terms of impairment coverage as a percentage of Stage 3s, the graph itself is pretty self-explanatory. When we started the year in 2024, it was at around 44% and now we have been able to increase it up to about 53%. And again, it's a very good position to be in and we are very comfortable with the downside risk and the impairment buffers that we have built over the years. On the customer deposit side, again, to continue from my previous point on how we have been able to lend on the foreign currency side. You will see from the numbers shown here, LCY to FCY deposit mix is roughly about 70-30 and that gives the bank a natural hedge on the foreign currency loan side and again, something that we will continue to leverage. So that's point #1. And that, again, is shown in the currency composition at the bottom right-hand corner, the distribution of that. The other point to highlight here is the strong growth that we have seen across the deposits. Of course, this does carry a one-off item and that I will briefly take through in the following slide. On the deposit franchise, I will maybe pay a bit more attention to the chart on the right-hand side, which is discounting the special -- the arrangement I spoke previously. So when we look at the numbers, our growth in deposits have been about 17% year-to-date. Most of it actually have come from our low-cost savings as well. And this, again, is something that we put a lot of effort in building and that will continue to be the case for the next couple of months or maybe the quarters to come. On a normalized basis, on an adjusted basis, our CASA ratio stands at 25% for the first half. The graph actually shows 30.4%. This is because of the deposits that we spoke earlier, which actually gets counted under CASA. But adjusted for that it is 25%. And this actually should be compared to the starting position in Q1 2024, which was at about 22% -- say, let's call it, 23%. So we have been able to put on about another 200 to 250 basis points of CASA balances in the first half. On capital ratios, I will sum this up by one statement. We are well capitalized and geared for growth. All our capital ratios are well above the regulatory minimum with sufficient buffers, which gives us more than adequate headroom for growth as well as for any downside risk. The narrative is actually the same for our liquidity positions as well, again, very much above the minimum internal threshold or the regulatory caps that we are subject to. So again, when we look at both the capital and the liquidity side, it's again a very well -- we are well positioned and gives us a good foundation, if I may say so, to again continue our growth prospects for the second half and in 2026. On key investor ratio. So this is slightly dated but I will also try to supplement this with the more recent data. On share price, we closed the first half at about LKR 120. At close of business today, it was about -- at about LKR 145. So we are 75% to our book value. We're also seeing increasing in the ROEs. Just a point to note here is in 2024, there was a one-off arising from ISB, so ROE of -- sorry, 12.2% is slightly overstated as a result of that one-off. But in the first half, the 10.6% that we are reporting here is purely driven by core banking profits and operations. And this, we will continue to focus on and improve. As I've said previously, our target range is to be in the midterms. And I think -- I'm very confident that we are well on course to achieve that looking at our financial performance. This is a comparison that we have put together to showcase the performance of our share. So again, number and the graph is self-explanatory. Just to highlight maybe 2 or 3 points. Looking at from the starting part of Jan to 2nd of August, acknowledging that there is a time lag from the reporting day to now, NDB's share price has grown by 23% compared to ASPI's 22% and banking sector, 20%. So what this says in simple terms is that share prices outperformed both ASPI and the banking sector. And it's fair to say that the corrective actions that we have taken in the past and the focus that we are putting to grow the business in a sustainable manner, now is gaining confidence and market traction and there is a lot more confidence in the NDB franchise. Just before I hand over the next session to Azzam to do the moderation. I just want to leave 3 things with the audience. Looking at our performance in the first half, looking at our balance sheet matrices, both capital and liquidity, we are geared for growth. Point #2, is that we want to drive consistency in every aspect of the business and to create value for the shareholders in the medium to long term. Point #3 is, we will continue to focus on our credit quality and thereby saving credit cost and making a bigger contribution to the bottom line. Looking at our first half performance, I can only say that I'm really proud to lead the franchise, ably supported by my leadership team and staff. And I want to extend a huge thank you for working with me and being focused on what we want to drive as what we have discussed in our previous webinars. Really looking forward to equally a strong second half and even a more rewarding 2026. With that, I will now hand over to Azzam to do the moderation for the Q&A.

Thank you, Kelum. [Operator Instructions] We have our first question. With year-to-date loan growth of over 20%, how do you expect this to proceed over the next 6 months? And also what kind of impact will the strong loan growth have on the Stage 3 ratios and impairments? And second part of it, the year-to-date loan growth over here. So let me take that. CEO has touched on it very briefly. We've -- in terms of liquidity and our solvency levels, we are strongly equipped to be able to support that growth. And with the economy being where it's at, interest rates being at the levels it's at, there is ample demand for credit. And in terms of its impact on our Stage 3 levels and our impairments, we reasonably expect the Stage 3 levels, as you've seen over the last 30 months or so, our Stage 3 levels consistently come down. And our impairment provisions, we've built adequate buffers in order to cushion against any unforeseen risk. And as a responsible institution, as and when there is a need to make adequate provisions, the bank has always endeavored to do so. So looking ahead in terms of the loan book growth, CEO mentioned this earlier on, the emphasis on quality lending. And that's what we've seen over the last 18 months at least and that will continue going forward. Thank you for that question. Moving on to the second question after including the audited first half 2025 profits, what will be the impact on our Tier 1 capital buffer? The numbers you see that have been reported in our financial statements that were published last Friday includes the impact of our CET1, Tier 1 and total CAR. That approximately adds approximately 0.8% to our solvency levels. And even after that, our CET1, we have a buffer of over 5% and our total CAR, a buffer of over 4%. So the numbers that have been reported and published include the impact of our interim profit that has been certified by external auditors. Thank you. Question #3. This is for Damitha. Can you give a commentary on your expected rate trajectory?

Yes. Thank you for that question. I think when you look at the prevailing market excess liquidity and again, government's strong fiscal situation and with the reserve building targets, more money being -- coming into the market, I don't see any pressure coming up for interest rates in near future. And we can expect a stable interest rate going to probably for the next -- first half of the next year.

Thank you, Damitha. Question #4, this is for Vinoj. What is NDB's expected loan growth over the next 1 to 2 years and what segments are likely to drive this growth?

Thank you for that. So the expected loan growth, I think we will stay with the same course that we had done in the first half of current year. So the segments-wise I think we are looking at more than the segments, I think where the loan growth we expect we expect to come is on the retail and business banking, which is the SME side. So we expect that to take momentum from the next 6 months. So we will expect the retail side and the SME side to grow faster than the wholesale banking and the project financing.

Thank you, Vinoj. Question #5. Any plan for debenture issuance in second half of 2025? So issuing debentures to augment our capital for Tier 2 purposes is part and parcel of our capital augmentation plan and our plans going forward. And that's something we most certainly will be looking at in the near term. And ultimately, when we do make that final decision it will be a function of where the rates at and the appetite for such instruments. So that's something more certainly, we are very closely looking at and something that we reasonably expect to do in the near term. Question #6. On the group level, net asset value has been flat at LKR 199.4 despite the strong growth in EPS. What's the reason for minimal improvement in net asset value. CEO, do you want to take this?

Actually, we may have to come back on that one in terms of the data, Yes, we'll do that.

Thank you, CEO. Question #7. NIMs held at 4% despite 170 basis points year-on-year drop in AWPR. What's the proportion of this resilience came from temporary pricing versus structural changes? That's a good question. Thank you very much. Let me take that. If you look at the NIMs of NDB, going back to 2022, it's been 4%. 2023, it's been 4%. 2024, it's 4.3%. In the first half of this year, it's 4%. And that is up from 3.9% in the first quarter of this year. And CEO alluded to this, there's a great emphasis on our pricing conversations internally. And trying to keep NIMs at 4% is something that there's a lot of time spent on. And if you look at the consistency in our NIMs, vis-a-vis if you look some of some of our peers, there's very few ultimately who could maintain those levels of NIMs over this period. So something that we are proud of. And this resilience ultimately came from sort of active discussions in asset liability pricing internally. So that's -- and in terms of CASA improvement as well, yes, it does have a very positive effect on NIMs. That's also helped us. But it's mostly on sort of timely repricing of both our assets and our liabilities. Question #8. What strategies NDB uses to drive sustainable ROE growth over the next 1 to 2 years? CEO, do you want to take that?

Yes, let me take that. Again, I briefly touched on this. So when we look at the dispersion of income over expenses and I think maybe 3 or 4 things come to mind. If you look at 2024, our cost on -- credit cost was about 30%. Our cost-to-income ratio was around 30%, say -- let's call it, 40%. So that's about 70% in total. And that leaves a balance 30% for our profit generate -- in terms of capital generation and distribution for the shareholders. So looking at those 3 matrices, what are we -- what have we done in 2025 first half and what are we looking for the next half and the next year to come is to firstly plug our credit cost. So at the current run rate, our credit cost is about 20% of total banking income. We would want that to come to obviously less than that, say, 15%, so we are looking at halving it from 2024 to 2025 and again, bringing that to mid-single digit in 2026. Now that itself will actually give a significant uptick and also building a good sustainable business for the longer term. The assets that we are putting on now come with good margins and we have had some great success in certain segments, particularly on the PF side. We are seeing good momentum on retail banking side. So those assets that we put in will also give additional revenue in the second half and in the years to come. From a future trajectory or target point of view, in terms of our aspiration, we want to get to mid-teen returns. And like with so many things, it's a journey that we are taking and the numbers that we are seeing now without any one-offs, ROE is at 10.6%. It will obviously improve with our performance in the second half. And that's how we look at the bank for the next 1 to 2 years.

Thank you, CEO. Next question is for you as well. What is the dividend payout policy of NDB?

So historically, the dividend policy rate has been around 30%. We don't see major changes in that. And I think that will be the way forward for 2026 as well. The only caveat is that with anything that also depends on, what I mean by that is on the dividend payout ratio, the capital position of the bank, the investments that we need to make for the future, whether those can be funded out of the profit generation within the bank. So our dividend payout will have to be taken on balance with that, our growth plans, as well as a decent return to the shareholders.

Thank you, CEO, whilst giving time for further questions to flow through, allow me to also say to the question on debentures. In the -- when the bank does intend to formally go ahead as per regulatory norms, we will be making a market announcement. So you will be kept abreast as and when the bank decides to do so. Question #12, on fees and commission income. What were the main driver in the quarter? And what's the future expectation? CEO, let me take that, if I may. As you pointed this out, there's 8% growth in the first half and quarter-on-quarter, close to a 20% growth. And the drivers came from a combination of all aspects of operations starting from trade to our credit card operations to our overall sort of deposit lending -- deposit and lending operations, i.e., our core operations. So it's a all-round sort of contributions from all aspects of our business operations is what ultimately drove our fee and commission income in the second quarter. And in terms of future expectation, there's much more we can do on that front in terms of improving our nonfunded income sources and that's something that we're spending quite a bit of time looking at. And reasonably, looking ahead, you can expect these levels, the contribution from fee income to improve in the months and years ahead. Question #13, on credit cards, do you see increased volumes in values of both? A combination of both, increase in the usage as well as in new card issuances as well. So a combination of both. Question #14, just to clarify, are the financials audited or unaudited? It's been certified by the external auditor for the 6 months period ended. And as a result, we were in a position to take the interim profit for solvency purposes. So it's been certified by the external auditor.

Maybe Sanjay can take that question.

Question # 16, this is for Sanjay. In terms of demand for leasing products, do you see demand tapering down in the final quarter of the year?

Well, the demand will -- we expect the demand to be as it is. And we have seen significant growth in this product with the imports continuing to happen. And I think in terms of the branch, is it the same question? In terms of the branch expansion, we will stick to what we have now and we will capitalize on the more digital penetration, which has given us some room for more convenience for the customers. So we'll remain like that and then have more digital initiatives happening.

Thank you, Sanjay. Question #17, this is for Vinoj. How did you grow term loans in foreign currency so much in 6 months? It's almost doubled from December 31, 2024.

So I wouldn't say we did in the last 6 months. But I think the pipeline was built even before 2025. I think we started building the pipeline well into the last quarter of 2024. So I wouldn't say it's a sudden surge of foreign currency loans. But I think the pipeline was pretty strong and we took some time to evaluate, get it approved and we have to be 100% sure about the risk inside these foreign term loans. So because of that, it took some time. But I think it was -- pipeline was built over a period of, I would say, more than, say, 9 -- 6 to 9 months. How we did it? I think kind of Kelum also explained, I think we have a strong franchise in terms of private banking. So where we have -- very comfortable with the dollar liquidity. So in -- so that was the enabler for us to build this loan quantum.

Thank you, Vinoj. Question #18, this is for Sanjay. Can you provide some color on how the vehicle leasing operations have progressed in the first half of 2025?

Yes, it has been -- as I mentioned before, it has been significant and you would have seen the detailed results. It's continuously improving. So there's a lot of positive sentiment with regard to lot of demand for new vehicles as well as exchanging of existing vehicles. So we see a positive growth in that segment.

Question #19, what are your NIM expectations? We touched on this very briefly before. Expectation is to, on a best effort basis, to maintain these NIMs at 4% or close to 4% going forward. Question #20. This is for Damitha. How is the bank's ISB portfolio performing? ISB portfolio, let me just repeat, please. Question #20. How is the bank's ISB portfolio performing?

ISB -- most of the ISB's are placed in the [indiscernible] portfolio. In addition to that few, we have some PDI bonds also, which also qualify as ISBs, which is mainly -- the major part is in the HTM portfolio and the balance is in the AFS portfolio.

Thank you, Damitha. Question #21. This is for Vinoj. In terms of foreign loans, what were the main source markets of foreign loans?

The main markets, I would say, was India in terms of sourcing. But I think we have gone beyond that also. We have done in some of the East Asian countries as well, maybe couple of loans. But I think largely it's the Indian market.

Thank you, Vinoj. Question #23. Let me route this to Alex. Has the Maldivian crisis had an impact on our portfolio?

Actually, the Maldivian crisis is mainly with the state sector. And if you look at our composition of our portfolio, it's predominantly tourism sector focused. And if you look at the tourism sector in Maldives, we see a vast autonomy in that particular sector where for one thing, it has the full backing of the state sector as well as we see the supply chains to the cash flows, everything does not directly get impacted due to some of the hardships that the country faces. So in that context, while we see there is a gray market forming related to the Maldivian currency or like certain risk factors that are getting highlighted post the downgrade that happened in August 2024, we've also tracked some of the improvements we are now the reserve levels have come up. And also, we've seen the support that is coming from the neighboring countries. So all in all, we are fairly -- we are happy with the performance of the portfolio. And also on the particular idiosyncrasies, we haven't seen any deterioration or none of these impacts trickling into client level credit quality.

Thank you, Alex. Question #24, this is for Vinoj. Do you still see demand for renewable energy projects?

I think we have been seeing less demand in the last 3, 4 months. But I think in the last couple of days, I think there have been quite a few inquiries. But I would say the demand has tapered down, probably because of mainly maybe the discussion still happening with the private sector and maybe with the authorities, probably maybe we might see some demand maybe in the next 3 to 4 months. But as of now, it is not the same what it used to be.

Thank you, Vinoj. CEO, this is for you. Why is NDB a better bank than its midsized competitors? How is your offering different?

Good question. Why are we a better bank? Because our service is superior. We take care of our customers very well and that's endorsed by customer testimonials. We are a good employer also and to deliver long-term benefits to the shareholders or to make profit sustainable, you need to have kind of those 2 or 3 things together. That's how I would put it. And in terms of offering, needless to say the banking market is quite crowded. How one can make itself different from the others is by making sure that you understand the customers' needs and provide a personalized solution. And that's what we excel in. So that's why we consider our bank to be a better bank.

Thank you, Kelum.

Perhaps we'll give another minute for the questions [indiscernible].

So we can take another minute if you have any further questions. CEO, this is for you. Since you mentioned the banking sector is overcrowded, what are the chances for consolidation in the industry?

Yes. So thank you for the question and a very pertinent one. So this was considered some time back. But obviously, there were more pressing priorities. So it was put in the back burner. I think there is obviously room perhaps for consolidation but this is something that each bank will have to look at on its merit and drive it. Is there room? I think there is. In terms of timing, I think that is something that I'm not able to comment. But hopefully, these are the things that the industry will take into account and look at based on their strategic fit, the service offering and the growth aspirations, so on and so forth.

Thank you, Kelum. There's one question for Sanjay on a product. What is the NDB One Account? Please explain.

Yes, it's actually designed to cater to the customers -- or actually one of our subsidiaries, NDB Wealth, the wealth customers, when they have their funds and they have a dual account that's with the bank as well. And when there are checks coming in and when funds are needed, it gets automatically transferred to the current account and the checks gets paid. So that's what it is. So the customers can get the benefit of the special interest rates that you get in the wealth fund and then also do the operations, day-to-day operations, transactions in the bank.

Thank you, Sanjay. CEO, this one is for you. You've touched on this before but that question has come up a few times. So what is the expected payout ratio for the period?

Sure. So that's -- I don't want to give a forward guidance. And as I explained previously, our dividend payout ratio historically has remained about 1/3 of our bottom line. We will obviously try to look at that depending on the investments that we need to make and giving a good return to the shareholders. So that's how I would put it into context. Just want to maybe give bit more context to the question that was raised previously about being overcrowded. And I think that probably isn't -- that's not the intention of what I want to drive. The market is -- I mean, we have in the country about 30 banks. That's what I -- that's the context that I wanted to drive. As a result, what the difficulties to making -- to make the service offering or the product offering a different one. So differentiation can only be driven among other things through the service aspect of it. So that's the message that I want to drive. I thought it's good to clarify that because otherwise, some of these, the words can be taken out of context and intention obviously was not to make any points around whether it's being overcrowded, that wasn't actually the intention.

Thank you, Kelum. So to all our participants, thank you very much for the time taken and engaging with us in a very productive, fruitful discussion. Once again, we'd like to kindly remind you that these proceedings are recorded and will be uploaded to our investor portal on our website very shortly. And for those, if you have any questions that remain unanswered, feel free to get in touch with us with a one-on-one with our CEO and the senior leadership team to take any and all questions that you may have in addition to the ones that you've raised. So thanking you all once again and have a pleasant evening. Thank you.