Nations Trust Bank pre tax Group Operating Profit grows 42% to Rs. 113.1 m

Nations Trust Bank achieved a Group Operating Profit before Tax of Rs. 113.1 million for the quarter ended March 31, 2006. This is the first quarter after the merger with Mercantile Leasing Ltd and the results have been pleasing for the Banking as well as the Leasing businesses.

Excellent growth was seen in Deposits and Advances, while fees and other income too contributed significantly to the bottom line. Compared to the same period last year (on a combined entity basis), Group Operating profit before tax showed an increase of 42% a statement from the Bank said.

Group profit after tax was Rs. 58.1 million. This should be viewed in the context of an increased Financial Services VAT of 20% and a higher income tax rate of 35%.

Consequently, affective tax rates have increased and Banks have to bear a greater burden of taxation, compared to other sectors of the economy. If this anomaly continues, it is likely that this additional burden could be passed on to customers, which would in the long run then be detrimental to accelerated economic growth, the statement said.

On the basis of a comparison of the combined entity for the period ended March 2005.

* Income improved to Rs. 589.1 million from Rs. 429.6 million. Net Interest income grew by 36%, while fees and other income grew by 40% reflecting improved volumes in trade, retail, and the credit card business. Foreign exchange income too, showed a gratifying growth.

* Operating costs increased to Rs. 396.1 million, an increase of 31%, mainly due to a lager branch network, a bigger workforce and much higher volumes. Provisions were also higher, primarily due to an increase in General Provision, reflecting the expansion in customer assets.

* Customer deposits grew to Rs. 16.1 billion, an increase of 12% in the quarter, while customer assets grew to Rs. 22.5 billion, showing an increase of 16%. The aggressive sales drive continues to pay good dividends.

Chief Executive Officers Zulfiqar Zavahir, said, "We are very pleased with the first quarter performance which augurs well for the rest of the year. We are confident that the platform has now been laid for continued growth and we look forward to a strong performance in 2006."