NATIONS TRUST BANK RECORDS A RESILIENT PERFORMANCE

5th March 2019

The Group closed the year ending 31st December 2018 with a post-tax profit of Rs. 3,702Mn, up by 10% over previous yearin a difficult operating environment which witnessed increased non-performing loans, tightening of liquidity, moderation of credit growth and higher taxes and levies.The Bank strategically steered its resources in consolidating of selective portfolios and managing impairment.

Net interest income increased by 27% mainly attributed to growth in volumes (up by 21%) and better management of NIMs, despite tight liquidity in the market exerting pressure on cost of deposits. Concerted efforts towards increasing fee-based activity resulted in the Group’s non-interest income increasing by 18% during the year. Trade, Card and Bancassurance together with structured financing fess contributed primarily towards this growth. Net trading losses narrowed (dropped by 24%) during period under review mainly due to lower amount of losses arising from FX funding SWAPs. Bank continued to adopt the strategy of utilising FX SWAP book to fund its rupee loan growth due to the benefit arising from the relatively lower funding costs of the FX SWAPS compared to high cost rupee deposits. Additionally, FX income arising from customer and trading also recorded a good growth for the year arising from both increased volumes and favourable exchange rate movements.

Impairment charges for the current year increased significantly due to growth in the loan book, cash flow stresses witnessed in some segments stemming from subdued economic conditions and due to the implementation of SLFRS 9, with the more forward-looking “expected credit loss” model which requires banks to exercise judgement on how changes in economic factors may affect expected credit loss. Bank further strengthened its underwriting and post disbursement monitoring with better alignment of collection processes.

Expenses recorded a growth of 15% mainly due to expenses arising from ongoing investments for the future in areas of digital, infrastructure, training and development and brand visibility. The Group’s Cost: Income ratio continued to record consistent improvement, declining below 50% for the first time to record 47.81% in 2018 from 51.57% reported in the previous year. The improvements in cost efficiencies reflect the Bank’s continuous investments in lean culture, productivity enhancements and Robotic Process Automation over the recent past.

Loan book growth was mainly driven by Corporate Banking (+46%) followed by Credit Cards (+25%) and Leasing (+20%). Growth in the Consumer and SME segments were relatively moderate at 15% and 11% respectively, reflecting stressed market conditions and the Bank’s efforts in consolidating these portfolios. Depositsrecorded a growth of 19% faster than the industry average of 15% with fixed deposits growing by 24% while CASA recording a subdued growth of 7%. Furthermore, the Bank continued to diversify its funding base by securing a USD 50 mn funding line from a DFI in August 2018.

The Group’s Tier 1 and overall Capital Adequacy Ratios strengthened to 12.15% and 15.59% by year end following the capital raised through a LKR 3.20Bn rights issue and a LKR 3.5Bn 5-year debenture issue in April 2018. The elevated capital ratios and capital buffers would afford a strong platform for future growth.

Commenting on the results and achievements, Renuka Fernando, CEO/Executive Director stated “Our performance for the year demonstrates our resilience during testing times and our ability to progress towards our medium term strategic goals. We have built a strong strategic foundation, an agile business model driven by a passionate team. It is with great optimism that we embrace the future as we look forward to building a new era in banking”.

Nations Trust Bank PLC is among the top 30 business establishments in Sri Lanka as ranked by Business Today Magazine, ably providing a host of financial products and services to a wide range of customers. Nations Trust is also the bank behind Sri Lanka’s first fully digital bank, FriMi. The bank operates 94 branches across the country, boasting an ATM network covering 127 locations and 45 Cash Deposit & Withdrawal Machines, plus more than 3,500 ATMs on the Lanka Pay Network and is the issuer and sole acquirer for American Express® Cards in Sri Lanka.

NATIONS TRUST BANK RECORDS A RESILIENT PERFORMANCE

2nd November 2018

The Bank closed the nine months ending 30th September 2018 with a post-tax profit of Rs. 2,918Mn with standing multiple challenges as witnessed across the industry with increasing non-performing loans, tightening of liquidity and moderating credit growth which particularly hindered the performance for the quarter. The Bank realigned its resources in a timely manner during the quarter with absolute focus on managing impairment provisions and bottom line growth whilst consolidating growth in selective portfolios.

Net interest income increased by 31% mainly attributable to growth in volumes (up by 26%) as NIMs stabilized and remained on par with the previous period. Interest income recorded a faster growth of 24% resulting from the increased growth in loan volumes and effective pricing of the loan book. Interest expense growth was lower at 19% due to the higher drop in cost of funds in comparison to the previous period. Nevertheless, the Bank noted a gradual rise in its cost of funds with the increasing interest rate environment which prevailed during the third quarter of 2018.

Non fund based income recorded a moderate growth of 16% with trade finance, syndication based facility fees and bancassurance fees contributing to a larger portion of the increase. Net trading losses dropped significantly during the period under review as customer and trading FX reported a higher growth rate coupled with the drop in the SWAP book and the resultant forward premiums.

Impairment charges for the current year increased as some portfolios of the loan book experienced cash flow stresses, which were also seen at an industry level. Bank NPL ratio stood at 3.71% from 2.29% reported in December 2017, mirroring industry trends.

Expenses recorded a growth of 19% which is partly due to investments made in technology, branding and people related skills development and employment engagement activities. Bank expenses pertaining directly to business volume growth were well managed at 10%. Notable increases are also seen in regulatory expenses. On the digital front, the Bank has undertaken a number of initiatives to improve efficiencies thereby re-engineering the opex model with the digitalizing of branch processes, automation of operational processes through Robotic process automations and enhancing the digital footprint across the Bank; all of which have made a considerable impact in generating operational efficiencies. With the Bank reporting a higher growth in revenue of 29%, the operational efficiencies resulted in the Cost: Income ratio decreasing to 47% from 51% reported in the previous period.

Loans and advances recorded a growth of 18% primarily driven by Corporate lending. Deposits recorded a growth of 18% with fixed deposits growing by 25% while CASA recorded a subdued growth of 1%. Furthermore, the Bank continued to diversify its funding base by securing a USD 50 mn funding line from FMO in August 2018.

Commenting on the results and achievements, Renuka Fernando, CEO/Executive Director stated "Our continuous improvement in financial performance demonstrates our core capabilities in steering the Bank during testing times. Managing impairment has been a key area of focus for us during the past few months whereby we have reorganized our collection shops and hope to keep a close watch in the upcoming months and will continue to focus until the stress on selective portfolios stabilize. Our digital transformation journey and investments in business transformational technology will continue to be pivotal strategic focus areas for us in the ensuing months. With the operating environment going through a turbulent phase, we remain focused in achieving our goals set for the year".

NATIONS TRUST BANK RECORDS RESILIENT PERFORMANCE

09th August 2018

The Bank closed the 6 months period ending 30th June 2018 with a post-tax profit of Rs. 1,875Mn and a pre-tax profit of Rs. 3,882Mn underpinned by good growth in business volumes and improved operating margins. Despite increased impairment charges slowing the bottom line growth, the Bank recorded a resilient performance in the back drop of industry witnessing tightening of market liquidity, moderating credit growth and increased non-performing loans during the first half of the year.

Net interest income increased by 35% mainly attributable to growth in volumes with a marginal improvement in NIMs. Interest income recorded a faster growth of 26% over interest expense growth of 20% due to the higher drop in cost of funds over the previous period.

Non fund based income including fees, commission and other operating income increased by 18% with trade and transactional fees contributing to a larger portion of the increase. Net trading losses, which mainly comprise of cost on funding swaps, remained at previous year reported levels as there had been no material movement in the SWAP book and forward premium rates in comparison to the previous period. Customer FX income reported a moderate growth of 16% with the volume growth.

Impairment charges for the current year increased due to cash flow stress witnessed in selective portfolios which is also reflected in the increase in the NPL ratio to 3.06% from 2.29% reported in December 2017, mirroring industry trends. Industry NPLs stood at 2.50% in December 2017 increasing to 3.30% by end May 2018.

Expenses recorded a growth of 20% which is partly due to the front loading of certain expenses particularly related to branding, marketing activities and investments made on up-skilling of knowledge, employee engagement and culture building. Investments made in technology and digital platforms during the second half of 2017 also had a direct bearing in expenses growth in the current year. Expenses pertaining directly to business volume growth were well managed at 9%. Notably, the Bank reported a higher growth in revenue of 30% to commensurate expenses growth resulting in the Cost: Income ratio decreasing to 48.6% from 52.8% reported in the previous period.

Loans and advances recorded a growth of 12% primarily driven by Corporate portfolio lending. Deposits recorded a growth of 16% while CASA grew by 15%. CASA mix was maintained at 28%.

Commenting on the results and achievements, Renuka Fernando, CEO/Executive Director stated “It has indeed been a resilient performance across the enterprise as we were able to balance business growth amidst fast changing market dynamics whilst pursuing strategies we embarked at the beginning of the year for future business transformation. As we celebrate our 19th year of operations crossing many significant milestones along the way, the future holds much promise and I look forward in concluding yet another rewarding year”.

NATIONS TRUST BANK COMMENCES THE YEAR ON A HIGH NOTE WITH PROFITS UP BY 30%

14th May 2018

Nations Trust Bank closed the first quarter ending 31stMarch 2018 with a post-tax profit of Rs. 939Mn, up by 30% over the corresponding period in the previous year with pre-tax profits increasing at a higher rate of 36%. Post tax profit growth for the Group was lower owing to additional tax provided for the inter-company dividend payments which also resulted in the Bank posting a much higher operating income. Profitability growth was underpinned by a 7% growth in loans and advances during the period under review along with improving net interest margins.

Net interest income increased by 43% as Net Interest Margins (NIM) climbed up steadily due to a drop in cost of funds over the corresponding period coupled with improved portfolio yields.

Non fund based income including fees, commission and operating income increased by 16% for the period under review with trade and transactional fees contributing to a larger portion of the increase. Net trading losses for the year amounted to Rs. 203Mn which is reflective of the swap cost arising from an increased funding forex SWAP book (up by 30%) coupled with an increase in forward premiums (up by 50bps) as compared with the comparative period. The Bank continued to benefit from the relatively lower funding costs of the forex swaps compared to high cost rupee deposits. Marked to market losses on the FIS portfolio was minimal for the quarter under review.

Impairment charges recorded an increase of 169% due to the combined impact of portfolio growth coupled with some stress seen in selective portfolios as evidenced in the deterioration of the Group NPL ratio to 2.62% from 2.29% reported in December 2017 which also mirrored the trend seen in the industry. The Bank has put significant focus to strengthen the collection and recovery processes.

Expenses recorded a growth of 14% of which relatively higher increases are attributable to expenses relating to investments in technology and branding with moderate increases stemming from regulatory and volume related expenses. The Bank continued its focus on pursuing operational excellence and the drop in the cost: income ratio to 49% is evident of it transformational journey.

Growth in loans and advances portfolio is primarily driven by Corporate, Leasing and Consumer portfolios. CASA growth was subdued due to large swings in a few corporate customers but acquisition of new accounts/customers on CASA continued its momentum.

Commenting on the results and achievements, Renuka Fernando, CEO/Executive Director stated “I am extremely pleased with the performance of the first quarter; well balanced across the business pillars with the strategies embarked upon moving in the right direction. It is also quite an exciting time for the Bank as we put in place many digital initiatives to bring about transformational change across the enterprise for the long term. In this aspect, it is indeed heartening to note that FriMi –our digital bank, has been placed amongst the Top 30 Best Digital Banks and Financial Institutions for 2018 in the Asia Pacific, Middle East & Africa region by the Asian Banker.”

NATIONS TRUST BANK RECORDS 31% GROWTH IN PRE-TAX PROFITS

28th February 2018

Nations Trust Bank closed the financial year 31st December 2017 with a post-tax profit of Rs.3,371Mn, up by 18% over the previous year with pre-tax profits increasing by 31%. A higher effective tax rate stemming from the increase in the financial services VAT rate as well as the additional tax of Rs. 210Mn on inter-company dividend payments impacted the Group bottom line growth. Healthy portfolio growth and strong fee-based income growth enabled the Group to record higher pre-tax profits, despite the effects of narrower NIMs and an increase in impairment provisions. 

The Group’s Net Interest Income grew by 26% underpinned by good growth in its advances portfolio. The faster increase in deposits rates which mirrored market trends due to tightening of market liquidity, especially in the first half of the year, resulted in interest expenses increasing by 56% whilst the corresponding increase in interest income was lower at 42%. However this trend was somewhat reversed in the second half with the decline in cost of funds and a moderate pick-up in NIMs. 

Net fee and commission income increased by 29% driven by growth in the cards fee based income, increased trade and transactional fees as well as contributions made from structured financing transactions. Net trading losses for the year amounted to Rs.558Mn which is partly reflective of the swap cost arising from an increase in the funding of the forex swap book by 30% and increase in SWAP premiums by 117bps. However, the Bank continued to benefit from the relatively lower funding costs of the forex swaps compared to high cost rupee deposits. Realized capital gains on the fixed income securities portfolio amounted to Rs. 190Mn for the period under review compared to Rs. 34Mn in the corresponding year.

Impairment charge increased by 58%, stemming primarily from the increase in individual impairment as the weather related weakening of the country’s agriculture sector had trickle down effects on several industry sectors. Previous year individual impairment charge was low as a result of reversals in impairment provisions. 

Total operating expenses increased by 15% due to business growth in transactional volumes and increased operational activity. Ongoing focus on automating processes, lean initiatives and productivity improvements resulted in the Group’s cost-to-income ratio improving to 52% from 55% in the previous year. 

Loans and advances recorded a well balanced growth of 25%. Deposits grew by 28% faster than the industry growth of 17%. Despite the prevalent high interest rate scenario, the Bank successfully grew its CASA base supported by the launch of the ‘Max Bonus’ Savings product, an innovative product proposition. The Bank successfully concluded a $50Mn funding line from IFC adding more diversity to the medium term funding structure of the bank. During the year, the Bank reached a major milestone in its digitization journey with the launch of Sri Lanka’s first digital bank, FriMi, a combination of next generation bank account, payment system and e-wallet wrapped up in one convenient app. 

Commenting on the results and achievements, Renuka Fernando, Director/CEO stated “It has been an extremely rewarding year as the Bank not only exceeded in achieving the financial goals set for the year but also successfully executed a numbers of strategic initiatives in our customer experience and digital journey. We look forward to another year with anticipation and renewed energy as we pursue our plans to deliver sustainable growth with customer centricity at our core”.

NATIONS TRUST BANK 9 MONTHS PRE-TAX PROFITS UP BY 31%

02nd November 2017

The Bank closed the first nine months of the year ending 30th September 2017 with a pre-tax profit of Rs. 5,063Mn, up by 31% over the corresponding period in the previous year. Post-tax profits increased at a lower rate of 20% as a result of the increase in the effective tax rate stemming from the increase in the financial services VAT rate as well as the additional tax provided for the inter-company dividend payments which impacted the Group bottom line growth. The dividend income received from the subsidiaries resulted in a higher other operating income for the Bank. 

Net interest income increase of 21% was mainly driven by the volume growth which offset the unfavorable impact arising from declining NIMs. The faster increase in deposits rates which mirrored market trends due to tight liquidity resulted in interest expenses increasing by 65% whilst the corresponding increase in interest income was lower at 44%. However, NIMs are expected to improve in the forthcoming quarter with the stability of market rates and improved liquidity evidenced during 3Q. 

Net fees and commission based income recorded a growth of 31% primarily driven by cards and trade related products. Other operating income also recorded good growth due to non trade related FX income. Net trading losses for the year amounted to Rs.492Mn which is partly reflective of the swap cost arising from an increase in the funding FX SWAP book of 21% and increase in SWAP premiums by 112bps. However, the Bank continued to benefit from the relatively lower funding costs of the forex swaps compared to high cost rupee deposits. Realized capital gains on fixed income securities portfolio amounted to Rs. 131Mn for the period under review compared to Rs. 21Mn in the corresponding year. 

Expenses recorded a growth of 12% with personnel and other operating expenses contributing towards the increase. Overheads expense growth of 14% is owing to the increase in business volumes, regulatory charges and due to increased branding and business promotion activities. The Bank also witnessed productivity and efficiency improvements in processing areas during the year thereby enhancing the customer experience quite apart from cost optimization. Higher revenue growth and well managed expenses growth resulted in the cost income ratio declining from 55.5% to 51.4%. 

Impairment charges recorded a 38% increase mainly due to the increase in individual impairment under the SME portfolio. Collective impairment charges which saw an increase in the previous quarters due to a fall back in recovery targets on consumer portfolios has been fully arrested in the 3Q as seen by the lower collective impairment provisions for the quarter. 

Total asset growth for the 9 months is 21%, driven by the loan book growth of 18% primarily driven by SME lending. Deposits recorded a growth of 21% while CASA grew by 13%. CASA mix was maintained at 26%.
 

Commenting on the results and achievements, Renuka Fernando, CEO/Executive Director stated “It is indeed pleasing to see our core businesses reaching scale and delivering enhanced earnings year on year and our first 9 months results are reflective of the collaboration efforts across the enterprise. We are also relentlessly pursuing our digital journey in providing state of the art experiences to our customers whilst leveraging technology which will enable Nations Trust to be future ready and steer ahead in the next phase of growth”.

NATIONS TRUST BANK 1H PRE TAX PROFITS UP BY 27%

22nd August 2017

The Bank closed the first half ending 30th June 2017 with a pre tax profit of Rs. 2,977Mn up by 27% over the corresponding period in the previous year. Post tax profits increased at a lower rate of 12% as a result of the increase in the effective tax rate stemming from higher financial services VAT as well as the additional tax provision of Rs. 90Mn for the inter company dividend transfer which impacted the Group bottom line growth. However the dividend income received from the subsidiaries resulted in a higher profit growth for the Bank and further strengthened the capital base of the Bank. 

Performance was driven by the momentum achieved in the Bank’s core activities which posted a revenue growth of 21% while the operating expenses increase was kept at 11%. The resulting improvement to operating margins were somewhat subdued by higher impairment charges for the period under review. 

Net interest income increased by 19% as the volume growth outperformed the impact arising from the narrowing of NIMs. Interest income increased by 45% whilst interest expense increased at a faster rate of 70% as deposit rates in the market continued to increase due to tight liquidity. 

Net fees and commission based income recorded a growth of 32% primarily driven by cards and trade related products. Other operating income also recorded good growth due to non trade related FX income. Net trading losses for the year amounted to Rs. 267Mn which is reflective of the swap cost arising from an increase in the funding FX SWAP book and unfavorable movements in forward premiums. However, the Bank continued to benefit from the relatively lower funding costs of the forex swaps compared to high cost rupee deposits. 

Expenses recorded a growth of 11% with personnel and other operating expenses contributing towards the increase. Growth in expenses were impacted by the higher taxes applicable for the current period on account of the increase in the VAT rate and the impact of regulatory allowances. Continued focus on efficiencies and digitalization of processes of fast growing transactional and servicing volumes have yielded productivity improvements across the Bank. Higher revenue growth and well managed expenses growth resulted in the cost income ratio declining from 57.5% to 52.7%. 

Impairment charges recorded a 86% increase partly due to the increase in collective impairment charges related to the growth in the loan book and partly due to a fallback of stringent recovery targets in some portfolios in the second quarter. The bank has taken immediate action to review and further strengthen its collections capacity and processes in order to achieve its collection targets. 

Growth in the loan portfolio was primarily driven by SME and Corporate whilst moderate growth was recorded in leasing and credit cards. CASA grew by 9% with new products launched during the early part of the year boosting growth in SA. The Bank successfully concluded a $50Mn funding line from IFC adding more diversity to the medium term funding structure of the bank. 

Commenting on the results and achievements, Renuka Fernando, CEO/Executive Director stated “The first half results for our Bank demonstrates commendable performance across all our businesses as seen by the growth numbers across all key portfolios. We will continue to drive our growth while ensuring that we do not compromise on our strong risk management platform. We also saw a number of our projects on the digital front come to fruition this year and have launched unparalleled, state of the art experiences to our customers with our Nations mobile banking app as well as our new payment and digital banking platform, FriMi. Internally we continue to drive our efficiencies through innovative technology such as robotics and AI and will continue our focus towards leveraging these efficiencies. We are confident that these technological capabilities will enable us to steer Nations Trust Bank through its next phase of growth in a fast changing environment.

NATIONS TRUST BANK RECORDS RESILIENT PERFORMANCE AMIDST CHALLENGES

28th February 2017

Nations Trust Bank closed the financial year 31st December 2016 with a post-tax profit of Rs.2,869Mn, up by 10% over the previous year with pre-tax profits increasing by 16%. Profit for the year was impacted by the narrowing of NIMs despite strong volume growth in loans and advances of 24% together with a reduction in impairment charges.

The Group’s net interest income growth moderated to 7% during the year, reflective of the rising cost of funds and a conscious rebalancing of the loan portfolio towards corporate and SME from consumer lending.

Net fee and commission income increased by 12% as the Bank placed strategic focus on widening its transactional banking proposition including pursuing of cross sell opportunities, offering enhanced onlinebanking services, trade related services and customer foreign exchange trading. Other operating income increased by 85% due to profits generated on the disposal of shares held in MasterCard.Net trading losses for the year amounted to Rs.241Mn which is reflective of the swap costsarising from anincreased forex SWAP portfolio and unfavorable movements in forward premiums. However, the Bank benefited from the relatively lower funding costs of the forex swaps compared to high cost rupee deposits.

The impairment charge declined by 30% to Rs.690Mn, reflecting the overall improvement in credit quality. Substantial improvement on individual impairment was recorded for the current year compared to 2015 which saw a significant one-off charge ona specific facility. Collective impairment increased marginally by 6% to Rs. 676Mn. Overall, the Bank’s NPL ratio was at a healthy 2.41% improving from 2.76% reported as at end of 2015.

The ongoing focus on lean initiatives and workflow methods together with increased automation and more reliance on digital channels enabled the Group to contain the increase in operating expenses to 11% during the year despite expenses related to investments in technology andpeople.Efforts on consolidation of the network also assisted in containing expenses whilst cost management initiatives assisted in rationalizing expenditure and minimizing increases over previous year in some of the key cost lines.

Loan book growth of 24% was well balanced across the portfolios with SME (48%) and corporate (28%) recording significant growth. Deposits too recorded a growth of 17%, however mobilization of term deposits was in the forefront as CASA contracted with a notable shift from low cost to term deposits seen partly due to increasing interest rates.

Commenting on the results and achievements, Renuka Fernando, CEO/Executive Director stated “Nations Trust has demonstrated a resilient performance which has withstood multiple industry challenges in year 2016. Economic growth is expected to pick up pace in 2017against the backdrop of conducive interest rates, as well as macroeconomic policies to boost domestic and foreign investor confidence. We have also embarked on our three year strategic plan aligned to the medium term growth prospects of the country. Our prospects for growth in all our target segments looks positive and we will seek to strengthen our position to become one of the leading players in the banking industry in Sri Lanka”.

NATIONS TRUST BANK MAINTAINS STEADY GROWTH

11th November 2016

Nations Trust Bank closed the first nine months of the year ending 30thSeptember 2016 recording a post-tax profit of Rs.2,038Mn which is a 5% growth over the corresponding period. Higher tax rates applicable for the current year narrowed the bottom line profit growth. Current quarter performance showed significant improvement with revenue growing by 19%, resulting in pre-tax profits for the quarter increasing by 24%. The gradual narrowing of NIMs contained revenue growth to single digit levels for the 9 month period despite the loan portfolio growing by 12%.

Net interest income growth was at a reduced pace of 6% as interest expenses recorded a faster growth of 48% in comparison to the increase in interest income of 25%. However, the impact of narrowing NIMs is gradually tapering off as seen by the performance in the current quarter which posted a higher NII growth of 16% over the corresponding period. Net fees and commission income recorded a growth of 11% with significant contributions coming from transactional fees related to volumes processed and card related income. Net trading income recorded a drop of 25% owning to higher cost on foreign exchange funding SWAPs due to the increase in the SWAP book and related premiums. The impact arising from the FIS portfolio on net trading positions was minimal for the period under review.

Impairment charges recorded a 33% decrease for the 9 month period mainly on account of a one-off provision made on account of specific facilities in the previous period. Overall, the Bank’s NPL ratio was at a healthy 2.84% marginally up from 2.76% reported as at end of 2015.

Expenses recorded a growth of 12% which is due to business volume growth and expenses related to investments in technology and people. Efforts on consolidation of the network also assisted in containing expenses whilst cost management initiatives assisted in rationalizing expenditure and minimizing increases over previous year in some of the key cost lines. The Bank also witnessed productivity and efficiency improvements in processing areas during the year thereby enhancing the customer experience quite apart from cost optimization. The increase in the cost: income ratio for the current year is largely due to lower revenue growth mainly owning to narrowing of NIMs.

Loan book growth was driven by increases in the SME portfolio of 28% with corporate and consumer portfolios also contributing reasonably well towards the growth. Deposits too recorded a growth of 14%, however mobilization of term deposits was in the forefront as CASA contracted with a notable shift from low cost to term deposits seen partly due to increasing interest rates. A significant milestone was met during the quarter with the balance sheet exceeding Rs. 200Bn mark within the span of 16 years of operations.

Commenting on the results and achievements, Renuka Fernando, CEO/Executive Director stated “Amidst the innumerable challenges that affected the industry during the year, our performance has been resilient, consistently demonstrating sustainable returns. Our focus for the remainder of the year is to continue the momentum on credit growth and end the year with a strong financial position. Our well penetrated branch network, dynamic business model, enhancing brand image and the energetic team will steer the Bank to even greater heights in the years to come”

NATIONS TRUST BANK RECORDS A STEADY PERFORMANCE

12th August 2016

Nations Trust Bank closed the first half of the year ending 30th June 2016 recording a post-tax profit of LKR 1,278Mn, a relatively slower growth of 2% over the corresponding period. Narrowing of Net Interest Margins (NIM) coupled with unfavourable impact arising from foreign exchange funding SWAPs slowed revenue growth. NIM impact was partly off-set by loan portfolio growth which saw accelerated traction in the 2Q thereby setting the pace for the year 2016.

Net interest income recorded a marginal growth due to the NIM compression as cost of deposits increased at a faster rate than re-pricing of loans. The resultant increase in interest expense of 39% over the previous period was only partly offset by the increase in interest income of 18%. However, a more positive trend was seen during the second quarter which saw higher growth in NII underpinned by improved NIM and higher growth in loan volumes. Core non-fund based income recorded a growth of 13% which narrowed to 4% due to unfavourable impact arising from foreign exchange funding SWAPs. Cards, trade and customer FX contributed well towards the growth in core fee based income. Further, the impact arising from the FIS portfolio on net trading positions was minimal for the period under review.

Impairment charges recorded a 55% decrease mainly on account of individual impairment, with collective impairment also showing an improvement across most of the portfolios. Significant drop in individual impairment is mainly due to a one-off provision made on account of specific facilities in the previous period.

Expenses recorded a growth of 13% as the current period witnessed a higher proportion of investments being made towards technology, people and branding which resulted in the underlying expenses increasing fairly rapidly over the previous period. Bank introduced the Life Cycle Training concept for all managers and banking assistants during the year aiming to enhance their soft skills, ethics, compliance and functional knowledge with the expectation of completing the full training for their respective grade within a period of two years. This initiative will allow staff to acquire necessary skills & competencies to move to the next job grade and a significant amount of resources have been deployed to make it a successes. Cost management initiatives coupled with the implementation of lean concepts across the organization has assisted in rationalizing expenditure and minimizing increases over previous year in some of the key cost lines. The increase in the Cost:Income ratio for the current period is mainly owing to the slow growth in revenue as a result of the narrowing NIMs. The Cost:Income ratio is expected to trend down in the 2H of the year with higher revenue growth driven by stabilizing NIMs, enhanced volumes coupled with a more evenly distributed operational expenditure base. Bank is committed towards driving its Cost:Income ratio below 50% in the medium term.

SME loan portfolios recorded an impressive growth of 17% for the first half, however contraction in the corporate book coupled with a subdued growth in the leasing portfolio moderated overall loan book growth for the Bank to 6%. The pending disbursements in the corporate book are expected to boost the loan growth in the ensuing quarter. Similarly, in tandem with the loan book growth deposits too recorded a growth of 6%. Mobilization of term deposits took the forefront as CASA growth slowed down with a notable shift from low cost to term deposits seen partly due to increasing interest rates. Bank continued to focus on CASA acquisitions and promotions across the branch network to build volume.

The capital position was sound at Rs. 15.5Bn with Capital Adequacy Ratios both at Tier 1 and 2 maintained at comfortable levels. ROE recorded a drop over the level reported previously due to the narrowing of NIMs. The Bank has consistently posted above industry average returns in the recent past.

Commenting on the results and achievements, Renuka Fernando, CEO/Executive Director stated “It has been a very challenging first 6 months for us, particularly with the narrowing of net interest margins impacting our core fund based income. As we become a larger player in the industry reaching out to a larger market segment, narrowing of NIMs is inevitable. Also as an industry we are now gradually moving to a low NIM environment hence the immediate impact comes as no surprise to us, nevertheless significant when comparisons are drawn against the previous period. We remain undeterred in our quest to build market share on assets, focusing on industries and geographies that we want to become relevant in. With customer centricity at the core of all our dealings we are quite optimistic on achieving our goals set for the year”.

NATIONS TRUST BANK COMMENCES THE YEAR WITH A STEADY PERFORMANCE

09th June 2016

The Bank closed the first quarter ending 31st March 2016 recording a post-tax profit growth of 20% underpinned by a moderate growth in non fund base income of 17% and a reduction in impairment charges by 63%. The first quarter performance was achieved under challenging conditions as the industry entered the year 2016 witnessing rising interest rates and further depreciation of the rupee.

Net interest income contracted marginally for the period due to NIM compression as cost of deposits increased at a faster rate than the re-pricing of loans. The resultant increase in interest expense of 31% over the previous period was only partly offset by the increase in interest income of 12%. Net fees and commission income recorded a growth of 17% for the period primary driven by higher FX income and lower losses in the Income Statement made on account of the FIS portfolio for the current period vis a vis 1Q 2015.Foreign exchange income recorded a growth of over 50% with enhanced customer volumes and favourable rate movements benefiting proprietary trading.The Bank continued to look towards enhancing its fee based income from products such as debit cards, transactional accounts and trade related products.

Impairment charges recorded a 63% decrease mainly on account of individual impairment with collective impairment also showing an improvement across all portfolios.

Expenses recorded a growth of 15% with personnel and other operating expenses contributing towards the increase. Other operating expenses growth is on account of increases in supplier tariffs, processing of volumes and brand enhancing activities. Cost management initiatives coupled with the implementation of lean concepts across the organization has assisted in containing some of the key cost lines to minimal increases during the quarter. The increase in the Cost:Income ratio for the current period is mainly owing to the slow growth in revenue as a result of the drop in NIMs.

Loans and advances portfolio of the Bank recorded a marginal growth mainly due to the volatility seen in the corporate portfolio but a commendable growth of 10% was seen in the SME book thereby cementing a strong base for further growth in the ensuing months. Deposits recorded a growth of 5% and a shift from low cost CASA to term deposits was noted which is partly due to the increasing interest rates. Steps are afoot for an aggressive CASA promotion across the branch network to build volume and acquire new customers.

The capital position was sound at Rs.16.9Bn with Capital Adequacy Ratios both at Tier 1 and 2 maintained at comfortable levels. ROE recorded a drop over the level reported for the full year 2015 due to the narrowing of NIMs. The Bank has consistently posted above industry average returns in the recent past.

Commenting on the results and achievements, Renuka Fernando, CEO/Executive Director stated “The performance of the Bank in the quarter has withstood multiple challenges and we remain undeterred in managing these challenges and achieving our goals set for the year”.