NTB posts Rs. 1.5 b PAT

Nations Trust Bank Group recorded a profit after tax of Rs. 1,596 million for the nine months ended September 30, 2013 compared to Rs. 1,510 million in the corresponding period of the previous year, a company media release said.

Group revenue grew 18%, which however, did not translate to an equal bottom line growth due to increases in operating costs attributable to the costs incurred on the execution of the strategic initiatives and higher impairment charges.

Core earnings were well balanced across the business pillars despite industry challenges impacting particular portfolios unfavourably.

The Central Bank enforced an easing monetary stance from the beginning of the year which led to a decline in policy rates resulting in a gradual decline in interest rates as the year progressed. Such measures taken to fuel credit growth did not materialise to anticipated levels as private sector credit growth remained sluggish throughout the period under review. Slower loan book growth led to excess funds being invested in low-yielding liquid assets with Banks witnessing a decline in NIMs. NPLs across the industry shot up with the slowdown in economic activity also leading to a substantial rise in impairment charges.

Group net interest income increased by 33% over the corresponding period with NIMs improving modestly. Yields on loans and advances came under stress due to low credit demand which was further challenged by regulatory caps on interest rates.

The gradual decline in cost of deposits coupled with improved spreads on the FIS portfolio with the maturing of lower yielding assets positively impacted NIM movement. Net fees and other operating income recorded a 22% growth, with an outstanding contribution from credit card related fees and commissions.

With the slowdown witnessed in external trade, trade finance income fell below previous year's level. Net trading results amounted to a loss of Rs. 310 million for the year mainly due to losses in FX income which was partly off set by gains attributed to the FIS portfolio.

The adverse movement in forward premiums resulting in negative market-to-market impact on funding SWAPS resulted in FX losses for the period. However, this adverse trend reversed towards the end of the third quarter wiping out most of the losses recorded in the first six months.