NTB growth momentum continues

The Nations Trust Bank (NTB) closed the first half with a post tax profit of Rs. 893m surpassing the corresponding period of last year by 21 percent. Core earnings posted good growth over 2011 with revenue increasing at a higher rate of 13 percent compared to an expense growth of 11 percent.

"The performance was primarily driven by four strategic business units comprising Retail and SME, Credit Cards, Corporate Banking and Treasury which recorded a volume and profit growth for the period," a spokesman for NTB said.

"Leasing also performed well despite industry-wide challenges arising from the changes in the import tax structure for vehicles.

The Bank continued to progress well in diversifying its portfolio and earnings base while optimising returns in a controlled growth environment," he said.

Maintaining net Interest Margins across the businesses were challenging due to the rising cost of funds and intensifying competition for deposits.

"Timely intervention in pricing the asset and liability portfolios and growth in business volumes across all businesses mitigated margin pressure to a great extent and resulted in net interest income recording a growth of 11 percent over the previous period.

Non-fund based income recorded a robust growth of 16 percent over the previous period," a Bank spokesman said.

Changes to import tax regulations coupled with the depreciation of the rupee curtailed imports volume, and impacted the Bank's Trade Finance income. Credit cards income recorded a growth of 32 percent stemming from the acquiring and issuing businesses.

Local and destination spending increased by over 25 percent compared to the 1H of the previous year driven by expansion in the Bank's card issuances. Forex income also recorded a growth as a result of currency volatility in the market.

The Bank continued to manage costs, curtailing the increase in expenses to 11 percent despite investments made in expanding the delivery network and building the brand.

No material shifts were seen in the cost composition for the year. Group cost income ratio stood at 59 percent on par with the previous period. Continuous emphasis has been made to improve cost efficiency and productivity across the key cost lines, processes and functions of the bank.

A credit risk management framework in the Bank ensured a NPL ratio of 2.91 percent compared to 2.79 percent reported in December 2011.

Loan loss provisions which comprises specific provision write-back and a general provision charge in line with the asset growth for the quarter was comparatively higher than the previous period which recorded reversals on both categories.

"The Bank also managed to grow its loan book by 13 percent to Rs 71b and deposits by 22 percent to Rs. 81b. Whilst the loan growth was on par with industry, deposit growth exceeded the market.

A significant portion of the funding of the asset book was through deposits which also improved the Loans to Deposit ratio, bringing in increased stability to the balance sheet," he said.

Driving low cost deposits continued to be challenging with such deposits contributing to only 11 percent of the growth recorded for the six months period. The rising interest rates have resulted in a steep shift towards term deposits with customers opting for higher returns on their regular savings and investments.

The Bank launched a savings campaign to reward customers across the branch network. The capital position was at Rs. 9.0b with Capital Adequacy Ratios both at Tier 1 and 2 maintained at comfortable levels.

The branch network expanded its footprint by opening four branches in Nelliyadi, Kaduruwela, Aluthgama and Wennappuwa.

Two SME business centres were opened in Kurunegala and Anuradhapura with the SME Toolkit being offered at these centres.