NTB sees through challenging conditions
View(s):Nations Trust Bank (NTB) closed the first quarter ending 31stMarch 2016 recording a post-tax profit growth of 20 per cent underpinned by a moderate growth in non-fund base income of 17 per cent and a reduction in impairment charges by 63 per cent. A NTB media release said that this first quarter performance was achieved under challenging conditions as the industry entered the year 2016 witnessing rising interest rates and further depreciation of the rupee. Net interest income (NII) contracted marginally for the period due to Net interest margins (NIM) compression as cost of deposits increased at a faster rate than the re-pricing of loans, it said.
“The resultant increase in interest expense of 31 per cent over the previous period was only partly offset by the increase in interest income of 12 per cent. Net fees and commission income recorded a growth of 17 per cent for the period primary driven by higher foreign exchange income and lower losses in the Income Statement made on account of the FIS portfolio for the current period vis a vis 1Q 2015.” Foreign exchange income recorded a growth of over 50 per cent with enhanced customer volumes and favourable rate movements benefiting proprietary trading. The bank continued to look towards enhancing its fee based income from products such as debit cards, transactional accounts and trade related products, the release added.
Impairment charges recorded a 63 per cent decrease mainly on account of individual impairment with collective impairment also showing an improvement across all portfolios. Expenses recorded a growth of 15 per cent with personnel and other operating expenses contributing towards the increase. Other operating expenses growth is on account of increases in supplier tariffs, processing of volumes and brand enhancing activities, according to the media release. ”The increase in the Cost to Income ratio for the current period is mainly owing to the slow growth in revenue as a result of the drop in NIMs.”
Loans and advances portfolio of the bank recorded a marginal growth mainly due to the volatility seen in the corporate portfolio but a commendable growth of 10 per cent was seen in the SME book thereby cementing a strong base for further growth in the ensuing months.
The release said that NTB’s capital position was sound at Rs.16.9 billion with Capital Adequacy Ratios both at Tier 1 and 2 maintained at comfortable levels. “NTB’s return on equity recorded a drop over the level reported for the full year 2015 due to the narrowing of NIMs.”