NTB’s 1Q post-tax profit up 76% to Rs. 214 m

In the interim financials released to the Colombo Stock Exchange, Nations Trust Bank PLC announced that the Group closed the 1st quarter of 2011 with pre-tax profits of Rs. 684 mn, an increase of 29% over 2010 while post-tax profits aided by reduced taxation rates grew by a much higher percentage of 76% from Rs. 214 mn in 2010 to Rs. 376 mn.   

Group net interest income was contained at previous year levels despite narrowing margins in the industry through 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 37% compared to the previous quarter.

The bank generated its non-funds based income mainly from capital market activities and from trade and credit card related business lines. Trade finance volumes, both on imports and exports picked up significantly compared to the previous year with the resultant income increasing by 56%. Credit card non fund based income grew by 14% for the quarter as consumer spends increased.  Foreign exchange income too showed a modest growth despite the relatively stable exchange rate that prevailed during the quarter.

Group operating expenses recorded an increase of 17% over 1Q 2010.  The increase is in line with the expansion drive initiated in the latter part of 2010 where investments were made in personnel, premises and systems to support the growth prospects of the bank and to capitalise on the enhanced economic opportunities available in the country.

Loan loss provision for the quarter recorded a net write back of 39 mn compared to a charge of 114 mn in the previous year.  The bank continued its focused recovery efforts while growing the asset book and maintaining asset quality. The NPL ratio increased to 6.0% mainly due to the change in the classification of non-performing assets as per the revised guidelines issued by the regulator effective from 1 January 2011.  This ratio is expected to stabilise with the growth in the loan book.

During the quarter, the total assets of the Bank grew steadily to reach Rs. 90 bn.  Gross loans and advances recorded a growth of Rs. 1.0 bn or 2% mainly attributable to leasing and consumer loans. The leasing book grew strongly during the quarter and surpassed the Rs. 10 b mark.  The deposit base increased by Rs. 3.1 b to Rs. 52 b, recording a 6% growth. Low cost funds recorded a healthy 11.7% or Rs. 1.6 b growth in the quarter. The capital position also strengthened to Rs. 7.4 b with the conversion of the second tranche of warrants, leading to a comfortable Group Capital Adequacy Ratio of 14.3%, which will support the plans to aggressively grow the asset book.

During the quarter, the bank opened a full service branch in Horana extending its branch network to 41. Further, the bank is planning to accelerate the growth of its footprint and delivery network in the rest of the country through the establishment of nine more branches by the year-end. The expansion of the physical presence will enhance the bank’s reach to customers and deposits, in addition to being a channel for credit growth especially for the SME sector.  

Commenting on the results, Saliya Rajakaruna, Director/CEO stated: “We have performed creditably during the quarter and managed to post good growth in core revenue streams with reasonable returns and strong balance sheet footing. Having drawn up our strategic plan for the medium term, we have embarked on an ambitious growth strategy for the next three years. We are convinced that new products, new market segments, new geographies and new demographics will provide a lucrative landscape for the growth of the bank.”

In a bid to add greater value to the NTB brand, significant investments were also made during the quarter to promote the brand. The Nations Trust Bank brand made further gains in its ranking and moved up from the 17th position in 2010 to 14th position in 2011 in the ‘Most Valuable Brands’ category in ranking of brands in Sri Lanka by Brand Finance Plc., the world’s leading independent brand valuation and ratings firm.   

The Nations Trust Bank has grown rapidly over the last eleven 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.