Nations Trust Bank maintains growth momentum

The Nations Trust Bank has closed the nine-month period ending September 30, 2011, with post-tax profits of Rs 1,170 mn, up 38% over the corresponding period in 2010; while pre-tax profits grew from Rs 2,020 mn to Rs 2,127 mn, an increase of 5%.

Group net interest income was below the previous year due to narrowing margins which was anticipated for the current year and visible across the industry. Its impact, however, was mitigated by the sustained growth in business volumes especially in the second and third quarters, timely re-pricing of deposits and a shift in the deposit mix towards low cost funds. Non-funds based income from all core lines of business including credit cards, trade service and treasury service businesses recorded good growth against the previous year. Impact of the reduction in corporate and personal taxation was reflected in increased import and export business volumes and consumer spending together with increased tourist arrivals bolstered these growth levels.

Trade finance volumes, both on imports and exports picked up significantly compared to the previous year with the resultant income increasing by 28%.

Credit card related non-fund based income recorded healthy growth for the period under review due to increased consumer spend and the roll out of new card acquisition programs.

Foreign exchange income too showed significant growth despite the relatively stable exchange rate that prevailed during the period.

During the period, group operating expenses recorded an increase of 5% over the corresponding period in 2010. The increase is in line with the expansion drive initiated in the latter part of 2010 where investments were made in people, premises and systems to support the growth prospects and strengthen risk management.

Five new branches were opened during the 9 months to September 2011 with 4 more to be opened before the year end.

Group NPL Ratio stood at 3.45% compared to 4.82% recorded in December 2010 and 4.8% in June 2011. Growth in the loan book through prudent credit underwriting assisted in lowering the NPL Ratio, despite the upward pressure via a more stringent regulatory environment in respect of NPL classifications coming into force at the beginning of the year.

Although not directly impacting business revenues in the short-term, several initiatives influencing the very foundations of the business of banking is currently taking root. Among them is the application of IFRS across the local banking system.