NTB to approach DFIs for medium-term funding

By Dinali Goonewardene

Nations Trust Bank (NTB) said it would negotiate medium-term funding from Development Finance Institutions (DFIs) to add to its tier two capital, declining to comment on the exact sums involved at an investor forum to release its results Tuesday.

The bank saw post tax profits grow 38% to Rs. 1.17 billion in the year ending September 2011 over the same period last year as net interest income margins fell from 5.9% to 4.8% with net interest income reaching Rs.3.03 billion in the nine months to September.

“The core business has done well with trade finance income increasing 29%, credit card income 25%, forex earnings 37% and fees and commissions 38%,” NTB CEO Renuka Fernando said.

The main reason for the fall in net interest income was that a regulatory cap of 24% was introduced on credit card interest which was previously 36%.

 Non fund based income increased 5% as fee based income increased 25% because trading gains available in fixed income portfolios were no longer available.

Operating expenses increased 5% to Rs. 1.04 billion and there was a right back of loan loss provisioning of Rs. 143 million adding to profit after tax of Rs. 1.7 billion.

The bank aims to maintain a cost to income ratio of 50% by 2013 and will increase its branch network by 15 by the end of next year.

Network coverage has already been extended to 46 branches with full service branches in Horana, Kalmunai, Anuradhapura, Malabe, Piliyandala and Ratnapura in 2011.

“We will offer leasing, credit cards, etc through our branch network and have a considerable portfolio in the Small and Medium Enterprise sector by 2014,” Fernando said.

“Our strategic objective is to continue our low cost funds.”

Leasing volumes expanded in 2011 with growth of 45%, venturing into new customer segments and the non performing loan ratio was healthy seeing in improved profit growth of 20% over the previous year a bank statement said.

The bank has a diversified loan book with 13% in corporate finance, 24% in leasing and fee based income, 4% in margin trading, 9% in cards and 15% in retail and the SME sectors.

“We are conscious of uneven global trends and their possible local impact. We believe we remain well equipped with a strong balance sheet, comfortable capital position, a sound risk management framework and an energetic workforce.

Overall macroeconomic factors remain conducive for continuing business momentum and we look forward to closing the year on a high note,” a bank statement said.