Nations Trust Bank on PAT at Rs.550 M in 1Q
View(s):Nations Trust Bank (NTB) closed the first quarter ending 31st March 2014 with a post-tax profit of Rs. 550 million, a growth of 10 per cent over the corresponding period in 2013, the bank stated in an announcement to Colombo Stock Exchange.
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, it was noted.
The year commenced with private credit growth falling further, despite market interest rates continuing to trend downwards following further easing of monetary policy. Share of pawning advances in total advances further reduced whilst significant increase in NPLs was also noted for the industry during first quarter of the year.
Net interest income recorded a growth of 22 per cent over the previous period with improved NIMs. Higher yielding asset portfolios grew moderately to partly off-set declining commercial loan interest rates whilst 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 bank noted that the low interest rate operating environment brought many challenges on our corporate portfolio with spreads thinning considerably coupled with a lackluster 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 per cent for the period under review, it said.
Credit cards contributed considerably towards this growth whilst new products launched during previous year showing great support for fee generation. Net trading income recorded exceptionally higher growth due to SWAP premiums favourably impacting FX income which in 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 1st quarter of 2013 since the sharp decline in the market price of gold began in April 2013, the bank stated.
Operating expenses recorded an increase of 19 per cent over previous period stemming mainly from the expansion of the branch network, accelerated growth in the offsite ATMs and corresponding increase in head count in branches and sales areas, it was stated.
The capital position was sound at Rs.15.2 billion with Capital Adequacy Ratios both at Tier 1 and 2 maintained at comfortable levels.
While striving to achieve the financial targets set for the quarter, the bank continued pursuing its strategic initiatives of opening new branches and launching new products.
Commenting on the results and achievements, Sarath Piyaratna, Executive Director stated “We have recorded yet another noteworthy financial performance in the quarter reflecting our strategy to continue the growth momentum to generate sustainable returns. We have remained focused on our strategy and much work is being done to ensure we continue to drive it forward. On the business front, we remain optimistic of a possible turnaround in demand for credit whilst acknowledging fresh challenges that may arise in a slow credit growth, low interest rate environment.”