After surpassing Rs. 1b profit mark, NTB now eyes the bigger league

Nations Trust Bank (NTB) has joined the select billion rupee profit league in 2010 due to exceptional performance outperforming rest of the industry in most key ratios with it eying its claim in the bigger league.

Completing its 11th year of operations the Bank in 2010 achieved a net profit after tax was Rs. 1.08 billion, up by 58% over Rs. 686 million posted in 2009.

“The challenges we faced during the journey from our simple beginnings up to the present have made us stronger and resilient to face the future with confidence. The extremely competitive environment which normally inhibits rapid progress in fact made us more determined and gave us the strength to strive harder.  As a result, we  performed exceptionally well during the year to post an impressive Net Profit after Tax of Rs. 1084Mn which is a 58% improvement on Rs 686 Mn posted in 2009. In most key ratios NTB has outperformed the market,” NTB Chairman Ajit Gunewardene said in his review in the Bank’s 2010 Annual Report.

He said that despite narrowing margins, NTB’s net interest income grew by 23% to Rs. 4.5 billion which signifies the growth in core banking activities. Non fund based income increased by 7% over the previous year. “Despite a slow revival of the economy, the Bank managed to grow its business well above the industry average, and  improve its market share to narrow the ‘clear water gap’ between NTB and peer group banks in the bigger league,” Gunewardene said. The Bank’s balance sheet grew by 18% to Rs. 83.2 billion in 2010.

NTB also achieved its targeted levels of deposits up by 9% to Rs. 48.3 billion and advances by 26% to Rs. 44.5 billion. The continued efforts to effectively manage costs have yielded positive results with Cost to Income ratio being contained at previous years’ level despite a slower rise in income against expenses creating upward pressure on the ratio.

Augmented by the improving economic outlook, the asset quality in the banking industry improved during the year. The non performing assets ratio of NTB had improved from 8% to 5% in 2010 as a result of prudent credit risk management, stringent monitoring and recovery efforts.

In his review Chairman Gunewardene also recalled that during its first decade of operations, NTB grew from its humble beginnings to a force to be reckoned with in the financial service industry.

“As we complete the first milestone in the second decade of the Bank, we have further improved our position in the Bigger League. This was clearly validated when your bank was rated at the 17th position by Brand Finance in their ranking of the country’s most valued Brands in 2010,” he said. The Nations Trust Brand has nearly doubled in value from the previous year to Rs. 2.7 bn in 2010.

Though noting that the 11 year journey has been a remarkable one, Gunewardene emphasized: “However, we are fully aware that we cannot rest on our past successes in the fast changing economic landscape.

As I stated in my message last year, we have geared ourselves to face new challenges as well as exploit the opportunities presented in post conflict Sri Lanka during 2010.”  

 “The focus during the year was to consolidate our position and establish the infrastructure, processes, skills and policies to facilitate the next phase of growth. Coupled with our unparalleled service standards, we now possess a diverse range of products and services to cater to the growing needs of our customers,” NTB Chief said.

He also said that moving away from the focus in the Western province, NTB branched out into Southern, Uva, Nothern and Eastern provinces and now has firmly established its presence in these regions.

 In the coming years, the Chairman said NTB will expand into other regions of the country while consolidating its presence in the regions where it has already established itself.

With customer convenience being the unique selling proposition, NTB has continued to develop and upgrade alternate delivery channels in the form of Internet banking, Bank at Doorstep, SMS banking and Tele banking which improves the capacity to serve a larger number of customers in the future.  “NTB believes that improvement is a continuous process.

We will not be content with the levels of customer satisfaction we have achieved, but will continue to improve with innovative products and services through different banking channels,” Gunewardene said.

The Chairman also said from 2011 onwards the ambitious expansion plans will be rolled out with a number of new branches scheduled to be opened shortly.

 “The expansion of our physical presence will enhance the Bank’s reach to customers and deposits, in addition to being a channel for credit growth. We also have plans for investments in infrastructure, information technology and human resources as part of the expansion plan.”

NTB Chief emphasized that with the revival of the economy, the Bank has identified the sectors with high growth potential and have positioned ourselves to become the preferred financial services provider for theses sectors. “In the medium term, demographic trends of customers are also expected to go through a transition. This would entail increased demand for home loans, leasing and personal credit and we plan to acquire a more than proportionate share of this business,” he added.

For the financial year ended on December 31, 2010, NTB Board of Directors has recommended a first and final dividend of Rs. 2/- per share payable on 6th April 2011 subject to the approval of the shareholders at the AGM.

This would entail a dividend payout of Rs. 461.2 Million for 2010 as against a dividend payout of Rs. 314.5 Million in the previous year, which is an increase of 46.6%.

“From the inception, our shareholders have continued to be a great source of strength, which was reaffirmed  with the successful conversion of 2010 warrants and I have no doubt that the 2011 warrants will also be fully subscribed to.

 Banking is inherently a capital intensive industry and the capital infusion by the warrant conversion will fuel our growth in the short to medium term,” Chairman Gunewardene said in his review in 2010 Annual Report.

The Board of Directors of Nations Trust Bank comprises Aji Gunewardene (Chairman), Eranjith Wijenaike (Deputy Chairman) Saliya Rajakaruna (Director/CEO),Krishan Balendra, Ronnie Pieris, A.K. Gunaratne, D. Weerakoon, A.R. Rasiah (Senior Director), M.E. Wickremesinghe, S. Piyaratne, M. Jafferjee, K. De Soysa.