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| Sunday, 16 May 2004 |
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| News Business Features Editorial
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Nations Trust Bank's profits soar 44 per cent Nations Trust Bank recorded a profit after tax of Rs. 15.3 million for the quarter ended 31st March, 2004 compared to Rs. 83.4 million for the same period the previous year. The variance was mainly due to the enhancement of the profits for the first quarter of 2003 by capital gains and other abnormals of Rs. 65 million. Excluding these one off gains, net income in the quarter increased by 44% from Rs. 163.6 million to Rs. 235 million, boosted by increases from both the core banking as well as from the credit cards businesses. Contribution was evenly spread between net interest income (in spite of a decline in interest rates) and fee income. Expenditure excluding bad debt provisions increased from Rs. 137.1 million in 2003 to 193.2 million in 2004, a significant portion of the increase being attributable to credit cards operations. The increase in costs in other areas was well within acceptable levels. The changes in taxation, in particular the increase of the VAT rate to 15%, other amendments on allowable expenditure and brought forward tax losses increased VAT/TAX for the Group to Rs. 20.5 million in 2004 from Rs. 7.2 million in 2003. In the first quarter, customer deposits grew by a satisfactory 5% from Rs. 6.57 million to Rs. 6.89 million and loans and advances increased by 7%from Rs. 6.62 million to Rs. 7.11 million despite a more conservative risk management strategy. The non-performing loans ratio continued to show further improvement to 5.1% from 5.5% at the end of 2003 underlining the quality of the asset portfolio. The performance of the American Express Credit Cards business in the first six months of its operation has also been very pleasing. The steady increase in both income and volumes in the core business augurs well for the future. The bank continued with its plan of opening branches in geographical areas where their target market is preponderant and opened three branches in Panadura, Gampaha and Kiribathgoda this year. There was also an off-site ATM opened at the Lanka IOC multi-service centre in Maradana. The bank plans to open several more branches and off-site ATM's in 2004 in strategic locations. The organisational changes, which commenced with the implementation of the new strategy formulated with the assistance of the Boston Consultancy Group in the third quarter of last year, are now in place. The revised operating model is beginning to bear fruit and the bank is in the process of increasing its range of products that cater to the needs of the target markets. Zulfiqar Zavahir, the Chief Executive Officer, stated that, "Considering the uncertainty that prevailed in the last few months, we are quite satisfied with the progress shown in the 1st quarter. We have worked hard over the recent past to ensure that the revised strategy is in place. The next few months will see a definite change of pace, increased focus on the target market segments and an aggressive marketing drive. I am confident that all other things being-equal, the bank is on course for a period of growth and increased profitability." |
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