In the interim results released to the Colombo Stock Exchange yesterday, Nations Trust Bank PLC reported that the Group had achieved an Operating Profit before Income Tax and Value Added Tax on Financial Services of Rs. 788.11Mn for the six months ended 30th June 2009 against Rs. 571.10 Mn reported for the comparable period last year reflecting a 38% growth. Profit after Taxes grew by 16% to Rs. 330.92Mn for the period compared to Rs. 285.03Mn in the corresponding period last year. Profit after tax grew at a lower rate than Profit before tax due to significantly higher Income Tax and Value added tax on Financial Services which increased by Rs. 171.12Mn(59%).

Net interest income grew by 34%, supported by the increase in deposits of 29%, with encouraging growth in the lower cost current and savings deposits. Advances grew by 3%. Margins trended down over the period mainly due to the decrease in interest rates across the industry. While Non-Interest Income grew by 26%, Foreign Exchange income was negative due to the exchange loss arising from a breach in operating procedures in the FCBU, on which the Bank had released a statement to the Stock Exchange on the 25th of June. However, this was largely compensated by income earned on trading of government securities, increased fees and other commission income.

Non Interest Expenses were kept under control and increased by 19% compared to a Total Net Income increase of 31%. While Personnel and Other Operating Expenses were well below the average increase, Premises, Equipment and Establishment Expenses increased by 55%, reflecting the accelerated branch expansion programme and other bank-wide initiatives which were undertaken in the second half of 2008.

Provisions for Bad and Doubtful Debts continued to pose challenges, with provisions for the half year increasing to Rs.476.63Mn from Rs. 233.77Mn last year. This is also reflected in the worsening of the Non–Performing Loan ratios for the industry which at the end of May (on figures released by the Central Bank) had deteriorated by 43% for the year. The NPL ratio (net of interest in suspense) for Nations Trust as at the end of June stood at 6.36%.

The Capital adequacy ratio as at end June was 13.6% while the consolidated Liquidity ratio was 29.4%, both of which were well in excess of the Central bank requirements of 10% and 20% respectively.

Mr. Zulfiqar Zavahir, Director/CEO stated "It is pleasing to note that the core business is continuing to develop quite strongly with both Balance sheet and bottom line showing very good growth momentum. All the efforts put in over the years, coupled with the rebranding and repositioning of the Bank, together with the intense focus on service excellence, has paid rich dividends. The aggressive provisioning in the first half, coupled with further tightening of risk management measures, means that we have cleared the decks and placed the Bank in a strong position to propel ourselves for greater growth in the next half. Now that peace has finally dawned in our country, we are restarting our expansion plans, with branches in the North and East to be opened in the next six months, spearheading our initiatives. Other key locations where we are not yet represented will follow next year."

In July last year, Fitch Ratings Lanka Ltd. reaffirmed the rating assigned to the Bank of A(lka) which denotes a strong credit risk relative to other issuers or issues in the country.

Nations Trust Bank has grown rapidly over the last ten years through a strategy of organic growth and acquisitions. These included the tie up with American Express credit 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 customer base.