Resilient NTB cautiously optimistic on second half

Thursday, 14 August 2014 00:37 - - {{hitsCtrl.values.hits}}

By Senuri De Silva Nation Trust Bank (NTB) has expressed cautious optimism for the rest of the year after recording positive results for the first six months of this year despite continuing challenges said top officials yesterday. NTB last week reported a post tax profit of Rs. 1,157 million in the first half of 2014, which was an 18% growth compared to the corresponding period last year.

Speaking at their annual investor forum yesterday, CEO Renuka Fernando said that NTB has been able to maintain steady growth despite challenges in the environment such as low credit demand, interest rates and reducing gold prices. Credit growth has been a big challenge for the bank with industry growth rates being -0.96%. However the bank has been able to maintain their numbers above the industry standards by a considerable amount, according to her, “Credit growth has been a big challenge for us. It’s our bread and butter as a bank. We are hopeful even though it has been challenging overall. It always gets better in the second half of the year than the first half. The numbers won’t be as ambitious as we thought but there will be an improvement.” Also loans and pawning services have struggled due to the drop in gold prices. According to the financial statement, the bank’s exposure to pawning has been managed below 2% of the overall loan book whilst the load to value ratio has been appropriately adjusted to manage the volatility of the market value of gold. She also indicated that the low interest range regime has hampered the industry growth and has presented further challenges for the bank by squeezing the profit margin. “Low interest range regimes are good for the country but not so much for banks. They create much lower margins than what we have enjoyed so far.” According to her, the bank hopes to address these challenges through their focus on improving delivery and distribution, enhancing geographical coverage, lean management as a core competency and increase the use of digital solutions to improve efficiency. Further indications were made of possible turn around in demand for credit in the second half of the year with the positive outlook on key macroeconomic indicators. They hope to address their growth with a change in their business model which has thus far been focusing on market opportunities in Colombo. “We had a hub and spoke business model which can’t be sustained in the growing market. Therefore we created regional hubs in the first 6 months of this year,” she said adding that they hope to develop them further as the year progresses. Leasing surpassed the Rs. 7 billion mark and portfolio is growing at 16% YoY. Furthermore about 80-90% of the leasing market comprises of motor vehicle leasing according to Fernando who made this estimate while answering questions directed at the head table by stake holders.