In the interim financial statements released to the Colombo Stock Exchange, Nations Trust Bank closed the six-month period ending 30 June 2011 at the group level with pre-tax profits of Rs.1,124 m, up 19% over the corresponding period in 2010, while post-tax profits grew from Rs. 494 m to Rs. 736 m, an increase of 49%.
Group net revenue recorded a 5% increase over the previous year, the key contributory factor being the increase in non-funds based income.
|Nations Trust Bank Chairman Ajit Gunewardene & Nations Trust Bank CEO Saliya Rajakaruna
Group net interest income was fractionally below the previous year due to narrowing margins though this impact was mitigated by the growth in business volumes, timely re-pricing of deposits and a shift in the deposit mix towards low cost funds
The focused approach to enhance non-funds based income resulted in a substantial growth of 23% compared to the previous year.
The bank generated non-funds based income from capital market activities as well as from trade and credit card related business lines. Trade finance volumes, both on imports and exports picked significantly compared to the previous year with the resultant income increasing by 36%.
Credit card related non-fund based income grew by 22% for the period under review with increased consumer spend and the roll out of a new card acquisitions program. Foreign exchange income too showed a significant growth despite the relatively stable exchange rate that prevailed during the period.
During the period, group operating expenses recorded an increase of 15% over the 1H 2010. The increase is in line with the expansion drive initiated in the latter part of 2010 where investments were made in people, premises and systems to support the growth prospects and strengthen risk management.
Adding further value, the increase in operating expenses also reflects investments made during the period in further enhancing the Nations Trust Bank brand.
Loan loss provision for the period recorded a net write back of Rs. 68 m compared to a charge of Rs. 205 m in the previous year as a result of focused recovery efforts. Group NPL Ratio stood at 4.8% compared to similar levels prevailing during December 2010, a reduction from 6% in March 2011.
Although growth in the loan book via selective credit underwriting during the 2Q assisted in lowering the NPL Ratio, upward pressure was put via a more stringent regulatory environment in respect of NPL classifications which came into force at the beginning of 2011. Net of provisions, the NPA Ratio stood at 2.74%.
The bank accelerated growth in the 2Q with the loan portfolio clearly indicating a steep pickup in volumes. For the first half of 2011, gross loans and advances recorded a growth of Rs. 5.3 b, up 11%. On a YOY basis, the uplift by 30 June 2011 was over 26%. The deposit base increased by Rs. 5.4 b to Rs. 54 b, recording a growth of 11% since 31 December 2010.
The capital position also strengthened to Rs. 7.8 b with the conversion of the second tranche of warrants, leading to a comfortable Group Total Capital Adequacy Ratio of 13.59%, which augurs well for further expansion of the loan book. During the quarter, the bank opened two full service branches in Kalmunai and Anuradhapura, thereby extending its branch network to 43. It is planning to accelerate the growth of its footprint and delivery network during the rest of the year in order to enhance the bank’s reach to customers and deposits, while being a channel for credit growth especially for the SME sector.
The bank also received recognition and accolades in various spheres during the six months under review.
Nations Trust Bank brand rating improved from the 17th position in 2010 to 14th position in 2011 in the ‘Most Valuable Brands’ category in the ranking of brands in Sri Lanka by Brand Finance Plc, the world’s leading independent brand valuation and ratings firm.
Nations Trust Bank was also the proud recipient of the Award for the Most Innovative Bank in Sri Lanka, presented by World Finance. The Nations Trust Bank Annual Report for 2010 won the Silver Award in the Banks (Asia Pacific) category for the second consecutive year at the US based LACP Vision Awards.
In addition, the 2010 Annual Report was listed within their top 50 annual reports in the Asia Pacific Region.
Commenting on the results and achievements, Nations Trust Bank Director/CEO Saliya Rajakaruna stated: “We have performed creditably during the first six months of 2011 and recorded a noteworthy financial performance. More importantly, the results reflect continuing growth and sustainable returns. The outlook for the rest of the year remains positive with private sector credit growth continuing, driven by an environment conducive for business. Our focus is to move swiftly to emerging areas of the economy and new geographies and also benefit from building scale in our current business. For the foreseeable future, the current pipeline of business is strong and likely to boost the performance of the bank. Accordingly we look forward to a rewarding second half.”
Nations Trust Bank has grown rapidly over the last ten years through a strategy of organic growth and acquisitions. These included the tie up with American Express cards and the merger with Mercantile Leasing Ltd. In keeping with the vision of the bank, ‘Making life simple by being the benchmark of convenience,’ Nations Trust Bank provides customer convenience through pioneering concepts such as ‘365 Day Banking,’ mini branches, personal banking centres, ‘Bank At Your Doorstep’ and extended banking hours which have helped to win over and maintain a strong and growing customer base.