Thursday Dec 12, 2024
Thursday Dec 12, 2024
Tuesday, 28 February 2017 00:00 - - {{hitsCtrl.values.hits}}
Nations Trust Bank closed the financial year 31 December 2016 with a post-tax profit of Rs.2,869 m, up by 10% over the previous year with pre-tax profits increasing by 16%. Profit for the year was impacted by the narrowing of NIMs despite strong volume growth in loans and advances of 24% together with a reduction in impairment charges.
The Group’s net interest income growth moderated to 7% during the year, reflective of the rising cost of funds and a conscious rebalancing of the loan portfolio towards corporate and SME from consumer lending. Net fee and commission income increased by 12% as the bank placed strategic focus on widening its transactional banking proposition including pursuing of cross sell opportunities, offering enhanced online banking services, trade related services and customer foreign exchange trading. Other operating income increased by 85% due to profits generated on the disposal of shares held in MasterCard.
Net trading losses for the year amounted to Rs.241 m, which is reflective of the swap costs arising from an increased forex SWAP portfolio and unfavorable movements in forward premiums. However, the bank benefited from the relatively lower funding costs of the forex swaps compared to high cost rupee deposits.
The impairment charge declined by 30% to Rs.690 m, reflecting the overall improvement in credit quality. Substantial improvement on individual impairment was recorded for the current year compared to 2015 which saw a significant one-off charge on a specific facility. Collective impairment increased marginally by 6% to Rs. 676 m. Overall, the bank’s NPL ratio was at a healthy 2.41% improving from 2.76% reported as at end of 2015.
The ongoing focus on lean initiatives and workflow methods together with increased automation and more reliance on digital channels enabled the Group to contain the increase in operating expenses to 11% during the year despite expenses related to investments in technology and people. Efforts on consolidation of the network also assisted in containing expenses whilst cost management initiatives assisted in rationalising expenditure and minimising increases over previous year in some of the key cost lines. Loan book growth of 24% was well balanced across the portfolios with SME (48%) and corporate (28%) recording significant growth. Deposits too recorded a growth of 17%, however mobilisation of term deposits was in the forefront as CASA contracted with a notable shift from low cost to term deposits seen partly due to increasing interest rates.
Commenting on the results and achievements, CEO/Executive Director Renuka Fernando stated: “Nations Trust has demonstrated a resilient performance which has withstood multiple industry challenges in year 2016. Economic growth is expected to pick up pace in 2017 against the backdrop of conducive interest rates, as well as macroeconomic policies to boost domestic and foreign investor confidence. We have also embarked on our three year strategic plan aligned to the medium term growth prospects of the country. Our prospects for growth in all our target segments looks positive and we will seek to strengthen our position to become one of the leading players in the banking industry in Sri Lanka.”
