Nations Trust Bank Maintains Steady Growth

Nations Trust Bank closed the first nine months of the year ending 30thSeptember 2016 recording a post-tax profit of Rs.2,038Mn which is a 5% growth over the corresponding period. Higher tax rates applicable for the current year narrowed the bottom line profit growth. Current quarter performance showed significant improvement with revenue growing by 19%, resulting in pre-tax profits for the quarter increasing by 24%. The gradual narrowing of NIMs contained revenue growth to single digit levels for the 9 month period despite the loan portfolio growing by 12%.

Net interest income growth was at a reduced pace of 6% as interest expenses recorded a faster growth of 48% in comparison to the increase in interest income of 25%. However, the impact of narrowing NIMs is gradually tapering off as seen by the performance in the current quarter which posted a higher NII growth of 16% over the corresponding period.  Net fees and commission income recorded a growth of 11% with significant contributions coming from transactional fees related to volumes processed and card related income. Net trading income recorded a drop of 25% owning to higher cost on foreign exchange funding SWAPs due to the increase in the SWAP book and related premiums. The impact arising from the FIS portfolio on net trading positions was minimal for the period under review.   

Impairment charges recorded a 33% decrease for the 9 month period mainly on account of a one-off provision made on account of specific facilities in the previous period. Overall, the Bank’s NPL ratio was at a healthy 2.84% marginally up from 2.76% reported as at end of 2015.  

Expenses recorded a growth of 12% which is due to business volume growth and 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 rationalizing expenditure and minimizing increases over previous year in some of the key cost lines. The Bank also witnessed productivity and efficiency improvements in processing areas during the year thereby enhancing the customer experience quite apart from cost optimization.  The increase in the cost: income ratio for the current year is largely due to lower revenue growth mainly owning to narrowing of NIMs. 

Loan book growth was driven by increases in the SME portfolio of 28% with corporate and consumer portfolios also contributing reasonably well towards the growth. Deposits too recorded a growth of 14%, however mobilization 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. A significant milestone was met during the quarter with the balance sheet exceeding Rs. 200Bn mark within the span of 16 years of operations.

Commenting on the results and achievements, Renuka Fernando, CEO/Executive Director stated “Amidst the innumerable challenges that affected the industry during the year, our performance has been resilient, consistently demonstrating sustainable returns. Our focus for the remainder of the year is to continue the momentum on credit growth and end the year with a strong financial position. Our well penetrated branch network, dynamic business model, enhancing brand image and the energetic team will steer the Bank to even greater heights in the years to come”