NTB begins year with commendable performance

Nations Trust Bank (NTB)closed the first quarter ending March 31, 2014 with a post-tax profit of Rs 550 million, a growth of 10% over the corresponding period in 2013.

The first quarter achievement was driven by good growth in top line revenue which was somewhat hindered by higher impairment charges and slower growth in customer advances which mirrored industry performance.

The year commenced with private credit growth falling further, despite market interest rates continuing to move downwards following further easing of monetary policy.

Share of pawning advances in total advances further reduced while significant increase in NPLs was also noted for the industry during the first quarter of the year.

Net interest income recorded a growth of 22% with improved NIMs. Higher yielding asset portfolios grew moderately to partly offset declining commercial loan interest rates while cost of liabilities reduced further with the re-pricing of shorter tenor deposits.

Continuous efforts to grow low cost deposits improved the deposit mix which assisted in reducing the cost of liabilities.

The low interest rate operating environment brought many challenges on our corporate portfolio with spreads thinning considerably coupled with a lacklustre demand for new credit.

Leasing and credit card portfolios grew remarkably to ease off the pressure on declining yields. Net fees and commission income recorded a growth of 21% .

Credit cards contributed considerably towards this growth while new products launched during previous year such as Nations Shopping card and Master card also showed great support for fee generation.

Net trading income recorded exceptionally higher growth due to SWAP premiums favourably impacting FX income which in the previous period recorded a loss.

Impairment charge for the current period amounted to Rs. 307 million with the major impact arising from the pawning portfolio.

There was no impairment on the pawning portfolio in the first quarter of 2013 since the sharp decline in the market price of gold began in April 2013.

However since then, the Bank's exposure to pawning has been managed at 2.4% of the overall loan book while the loan to value ratio has been appropriately adjusted to reflect the market value and no further significant impairment charges are expected from the pawning portfolio. Operating expenses recorded an increase of 19% over the previous period stemming mainly from the expansion of branch network, accelerated growth in the offsite ATMs and corresponding increase in head count in branches and sales areas.