National Development Bank PLC (NDB) has reported a recovery in profitability despite absorbing the financial consequences of a massive internal fraud amounting to approximately Rs. 13.64 billion. Yet, behind the bank’s improving earnings, expanding balance sheet and apparently comfortable liquidity position lies a critical accountability question: how much of the stolen money can actually be recovered, and who will ultimately bear the cost if recovery efforts fail?
The bank’s latest financial results for the nine months ended September 30, 2026, show that its underlying banking operations remain profitable. However, the final forensic investigation confirmed that the fraud identified in April was marginally larger than previously disclosed, increasing from approximately Rs. 13.58 billion to Rs. 13.64 billion. The additional amount has been recognised in accordance with applicable accounting standards.
Although the difference between the preliminary and final figures is relatively small, the overall scale of the fraud raises serious questions about internal controls, supervisory effectiveness and the ability of a major financial institution to safeguard depositors’ money.
NDB recorded a post-tax profit of Rs. 7.7 billion during the nine-month period, compared with a restated Rs. 5.1 billion in the corresponding period of 2025. Excluding the fraud’s impact, its 2026 post-tax profit would have reached Rs. 9.1 billion, against Rs. 7.5 billion a year earlier.
The bank also reported a third-quarter post-tax profit of Rs. 2.9 billion, demonstrating that its core business continues to generate earnings despite the damage caused by the incident.
Nevertheless, profitability must not be confused with financial recovery. The bank has disclosed that it continues to pursue available recovery avenues and appropriate legal and internal action. But the published results do not establish how much of the Rs. 13.64 billion has already been recovered, how much remains outstanding, or when meaningful recovery can reasonably be expected.
That information is essential for shareholders assessing the ultimate cost of the fraud and for depositors seeking reassurance that the bank’s governance weaknesses have been addressed.
The balance sheet illustrates the scale of the institution’s operations. Total assets stood at Rs. 975.4 billion at September 30, up from a restated Rs. 926.1 billion at the end of 2025. Without the fraud-related adjustment, assets would have reached Rs. 986.5 billion.
Net loans increased to Rs. 599.7 billion, while deposits rose to Rs. 717.5 billion. Shareholders’ equity amounted to Rs. 82.8 billion, with Group equity at Rs. 90.1 billion.
Liquidity ratios remained above regulatory minimums: the rupee Liquidity Coverage Ratio was 199%, the all-currency ratio 161.8%, and the Net Stable Funding Ratio 126.8%. The total capital adequacy ratio stood at 14.8%, while the Common Equity Tier 1 ratio was 9.5%.
These indicators suggest that NDB retains significant financial capacity. However, the decline in its Common Equity Tier 1 ratio from 11.3% at the end of 2025 highlights the importance of protecting capital against further losses.
Meanwhile, the bank’s share price fell to Rs. 109.50 from Rs. 141.25 at the end of 2025, indicating a market valuation challenge that deserves close scrutiny, although the decline alone cannot be attributed entirely to the fraud.
Chief Executive Officer Kelum Edirisinghe says the bank is strengthening governance, technology and operational controls while keeping the Central Bank of Sri Lanka informed.
The decisive test, however, will be measurable results. Investors and depositors need transparent recovery updates, independent verification of remedial controls and clear accountability for failures that permitted such a substantial fraud.
NDB’s earnings may be recovering, but restoring confidence requires more than profitable quarters. It requires credible answers about the missing billions, effective safeguards and demonstrable progress in recovering the money.
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