Nation Trust Bank PAT increases by 24% | Daily News


Nation Trust Bank PAT increases by 24%

Nation Trust Bank Group’s Operating profit before all taxes declined by 7% owing to the reasons mentioned above, while Profit After Tax (PAT) increased by 24% due to withdrawal of the Debt Repayment Levy and NBT on financial services in the first quarter of 2020.

Interest income declined by 8% due to the lack of growth in the loan book and interest ceiling imposed from April 2019. Average Weighted Prime Lending Rate reduced by 296 basis pointsas at endof 1Q 2020 Vs 1Q 2019. Average loan book declined by 2.64% in 1Q 2020 Vs 1Q 2019. However, cost of funds declined at a faster rate of 13% due to effective fund management strategies supported by the growth in current and savings account balances. As a result, reduction in Net Interest margins was contained to 30bps while Net Interest Income reduction was contained at 1%.

While lending, credit cards, trade and deposit related fees recorded a drop owing to lower business volumes, Net FX gains increased during the period increasing the total net revenue to 2%. Gains on trading FX increased arising from forward FX funding swaps due to the depreciation of the Sri Lankan Rupee during the period in contrast to the appreciation in the previous period.

The increase in operating expenses was kept to a minimum of 1% as a result of comprehensive cost containment strategies implemented throughout the period under review, especially in times of curtailed growth in business volumes.

When assessing the impairment provisions, the Bank considered the potential impact of the COVID-19 pandemic on customers as well as the relief package introduced in the form of a debt moratorium by the government. Additional impairment provisions were made for identified customer segments impacted due to COVID-19 related developments, by assessing potential delays to the cash flow expectations based on currently available information, leading to a 46% increase inthe impairment charge.

The Group’s Tier I Capital and Total Capital Adequacy ratios as at 31st March 2020 stood at 12.44%, and 16.62% respectively, both well above the corresponding minimum regulatory requirement of 8% and 12%, applicable as at the reporting date. CBSL reduced the Capital Conservation Buffer by 0.5% with effect from 27th March 2020. The Statutory Liquid Asset Ratio (SLAR) for the Domestic Banking Unit and the Off-Shore Banking Unit was at 24.91% and 26.74% respectively as at the reporting date. A shortfall in revenue is expected against the targets set as a result of the debt moratorium, interest rate ceilings and also due to sluggish credit growth. The bank is in the process of gathering applications for the debt moratorium by customers and the eligible applications are still being reviewed.

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