NTB Growth Momentum Continues
The Bank closed the first half with a post tax profit of Rs. 893Mn,
surpassing the comparative period of last year by 21%. Core-earnings
posted good growth over 2011 with revenue increasing at a higher rate of
13%, compared to an expense growth of 11%. The performance was primarily
driven by four strategic business units comprising of Retail & SME,
Credit Cards, Corporate Banking and Treasury, which recorded both volume
growth and profit growth for the period.
Leasing also performed well, despite industry wide challenges arising
from the changes in the import tax structure for vehicles. The Bank
continued to progress well in diversifying its portfolio and earnings
base, while optimizing returns in a controlled growth environment.
Ronnie Peiris, Chairman, Nations Trust Bank and Saliya
Rajakaruna CEO/ Director, Nations Trust Bank
Maintaining net Interest Margins across the businesses were
challenging due to the rising cost of funds and intensifying competition
for deposits. Timely intervention in pricing the asset and liability
portfolios and growth in business volumes across all businesses
mitigated margin pressure to a great extent and resulted in net interest
income recording a growth of 11% over the previous period.
Non fund based income recorded a robust growth of 16% over the
previous period. Changes to import tax regulations, coupled with the
depreciation of the rupee, curtailed imports volume and impacted the
Bank’s Trade Finance income. Credit cards income recorded a commendable
growth of 32%, stemming from both the acquiring and issuing businesses.
Both local and destination spend increased by over 25% compared to the
1H of previous year driven by significant expansion in the Bank’s card
issuances. Forex income also recorded a notable growth as a result of
currency volatility in the market.
The Bank continued to manage costs, curtailing the increase in
expenses to 11%, despite investments made in expanding the delivery
network and building the brand. No material shifts were seen in the cost
composition for the year. Group cost income ratio stood at 59% on par
with the previous period. Continuous emphasis has been made to improve
cost efficiency and productivity across the key cost lines processes and
functions of the bank.
After 6 months of rigorous process re-engineering and improvements,
the bank is currently reaping the benefits with substantial savings
generated from identified expense lines.
As part of its focus on cost efficiency and productivity measures,
the bank also took the first steps in digitalizing a number of its
internal processes, starting from the Boardroom. With the introduction
of the iPad Board Application, the Bank eliminated costs in terms of
paper usage, printing and couriering, whilst giving Board Members access
to all past and current board papers at the click of a button, enabling
both simpler and faster decision making.
A number of other similar projects have commenced across the
A sound credit risk management framework in the Bank ensured a
healthy NPL ratio of 2.91% compared to 2.79% reported in December 2011.
Loan loss provisions which comprises of specific provision write-back
and a general provision charge in line with the asset growth for the
quarter, was comparatively higher than the previous period which
recorded reversals on both categories.
The Bank also managed to grow its loan book by 13% to Rs 71Bn and
deposits by 22% to Rs. 81Bn. Whilst the loan growth was on par with
industry, deposit growth exceeded the market. A significant portion of
the funding of the asset book was through deposits which also improved
the Loans to Deposit ratio, bringing in increased stability to the
Driving low cost deposits continued to be challenging with such
deposits contributing to only 11% of the growth recorded for the 6
The rising interest rates have resulted in a steep shift towards term
deposits, with customers opting for higher returns on their regular
savings and investments. The Bank launched a savings campaign to reward
customers across the branch network and has seen steady positive
The capital position was at a sound Rs.9.0Bn with Capital Adequacy
Ratios both at Tier 1 and 2 maintained at comfortable levels.
In line with the strategy of expanding customer touch points to
enhance accessibility and convenience, the branch network expanded its
footprint by opening 4 new branches in Nelliyadi, Kaduruwela, Aluthgama
and Wennappuwa. Two SME business centres were also opened in Kurunegala
and Anuradhapura, with the SME Toolkit being offered at these centres.
Several ties-up were established with remittance houses across the globe
and the Retail team made numerous visits to the Middle Eastern and
European countries to enhance relationships and promote the Nations
Trust brand as a key player to the Sri Lankan expatriate population.