NTB achieves Rs. 1 b in post tax profits for 2010

In the financial results for 2010 released to the Colombo Stock Exchange, Nations Trust Bank PLC (NTB) announced that the Group closed the year 2010 with pre-tax profits of Rs. 2.55 billion, a 58% increase over 2009, while post tax profits also grew by 58% and crossed the Rs. 1 billion mark to reach Rs. 1.08 b.

The Group results revealed increased volumes and improved margins across all its business lines during the year under review, which helped in achieving the profit growth.

Improved credit quality as experienced in the industry, resulted in better collections which also helped to boost the profits of the Group. The 4th quarter 2010 results of the Group were also equally pleasing with pre-tax profits increasing by 31% and post tax profits increasing by 30%.

Group net interest income recorded an increase of 23% over 2009. Whilst interest income declined by 16% due to the downward revision of interest rates, it was more than off-set by a 34% reduction in borrowing costs.

Total non-fund-based income showed a growth of 7% over the previous year. Both Trade and FX income also showed exceptional growth levels for the current year. Trade income growth was due to the general increase seen in import/export volumes compared to the previous year. FX income performed well due to the increase in customer volumes and the favourable movements in forward premiums.

Trading income on FIS portfolio was notably well below the levels seen in 2009. Credit card non-fund based income was marginally above the previous period as a result of the challenges seen in the industry which experienced contraction in the active card base, high attritions, declining receivables and stagnant interest bearing balances.

Operating expenses increased by 19% during the year to Rs. 3,932 m. The increase was driven by growth in personnel cost. Premises and establishment costs and other overhead expenses also incurred increases on account of inflationary pressures and supplier rate hikes.

Largest turnaround for the current year has been on specific provisions, which decreased by 79% with net NPL ratio decreasing from 8.5% to 4.9% in 2010. Industry NPL ratio (net of IIS) stood at 6.3% as at November 2010.

During the year, the bank was well focused on NPLs as economic growth picked up and was able to reverse what had been provided for in previous years. Constant vigilance in maintaining a good loan book also ensured that the bank was writing good credit and booking good assets during the year.

During the year, the total assets of the bank grew steadily and crossed the Rs. 80 b milestone to reach Rs. 83.24 b by year end. Gross loans and advances portfolio recorded a growth of Rs. 10.3 b or 28%, of which almost 50% was extended in the last two quarters indicating the growing appetite for credit in the market.

Although not expanding by the same magnitude as the loan book, the deposit base nevertheless increased to Rs. 48 b by the end of December 2010 recording a growth of Rs. 4.2 b or 10%. Capital position also strengthened to Rs. 6.8 b enabling the reporting of a healthy Capital Adequacy Ratio of 15.74%, well ahead of levels considered prudent.

Commenting on the results, Chairman Ajit Gunewardene stated: “I am delighted that within a short span of 11 years, the bank has been able to cross the threshold of Rs. 1 billion in post tax profits for the first time in its history. Our objective is to take advantage of the numerous opportunities that are present in this new economic environment and place the bank at the forefront of the financial services industry. We have initiated an accelerated expansion plan for the bank and are making good progress to stake our claim in the bigger league. I wish to thank all the staff of the bank for their hard work, commitment and dedication which has played a major role in taking the bank to where it is now.”

Director/CEO Saliya Rajakaruna stated: “I am proud of what we achieved in 2010, especially our profit growth, enhanced capital and balance sheet footings.  Against a backdrop of an uneven but improved economic landscape both globally and locally, our success is well balanced and pleasing for the enhanced productivity in the use of capital, risk and costs. The country has entered a new era of rapid social and economic development, creating an increase in demand for diversified financial services. We remain focused on continuing to increase the growth prospects of the bank by engaging fully in the new opportunities, whilst keeping our eyes firmly on the needs and interests of our customers, managing our risks and maintaining strategic momentum.”

Nations Trust Bank has grown rapidly over the last 10 years through a strategy of organic growth and acquisitions. These included the tie up with American Express Credit 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 – NTB 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 customer base.