Nations Trust Bank commences 2016 with a steady performance

Friday, 13 May 2016 00:00 - - {{hitsCtrl.values.hits}}

Nations Trust Bank has closed the first quarter ending 31 March 2016 recording a post-tax profit growth of 20% underpinned by a moderate growth in non-fund-based income of 17% and a reduction in impairment charges by 63%.

The first quarter performance was achieved under challenging conditions as the industry entered the year 2016 witnessing rising interest rates and further depreciation of the rupee.

In a statement NTB said net interest income contracted marginally for the period due to NIM compression as cost of deposits increased at a faster rate than the re-pricing of loans. The resultant increase in interest expense of 31% over the previous period was only partly offset by the increase in interest income of 12%. Net fees and commission income recorded a growth of 17% for the period primary driven by higher FX income and lower losses in the Income Statement made on account of the FIS portfolio for the current period vis-à-vis 1Q 2015.

Foreign exchange income recorded a growth of over 50% with enhanced customer volumes and favourable rate movements benefiting proprietary trading. The bank continued to look towards enhancing its fee based income from products such as debit cards, transactional accounts and trade related products.

Impairment charges recorded a 63% decrease mainly on account of individual impairment with collective impairment also showing an improvement across all portfolios.

Expenses recorded a growth of 15% with personnel and other operating expenses contributing towards the increase. Other operating expenses growth is on account of increases in supplier tariffs, processing of volumes and brand enhancing activities. Cost management initiatives coupled with the implementation of lean concepts across the organisation has assisted in containing some of the key cost lines to minimal increases during the quarter. The increase in the cost:income ratio for the current period is mainly owing to the slow growth in revenue as a result of the drop in NIMs.

Loans and advances portfolio of the bank recorded a marginal growth mainly due to the volatility seen in the corporate portfolio but a commendable growth of 10% was seen in the SME book thereby cementing a strong base for further growth in the ensuing months. Deposits recorded a growth of 5% and a shift from low cost CASA to term deposits was noted which is partly due to the increasing interest rates. Steps are afoot for an aggressive CASA promotion across the branch network to build volume and acquire new customers.

The capital position was sound at Rs. 16.9 b with Capital Adequacy Ratios both at Tier 1 and 2 maintained at comfortable levels. ROE recorded a drop over the level reported for the full year 2015 due to the narrowing of NIMs. The bank has consistently posted above industry average returns in the recent past.

Commenting on the results and achievements, CEO/Executive Director Renuka Fernando stated: “The performance of the bank in the quarter has withstood multiple challenges and we remain undeterred in managing these challenges and achieving our goals set for the year.”