NTB post tax profit Rs. 406 m

Nations Trust Bank closed the quarter ending March, 31 2012, with a post tax profit of Rs. 406 million surpassing the previous period by 8%. Current year quarter was driven by a noticeable growth in business volumes, modest growth in top line revenue and controlled growth in operating expenses. All business pillars contributed to PBT in equal measure resulting in a well balanced result. With the mandatory credit ceiling coming into effect, business portfolios were re-positioned to optimize returns in a controlled growth environment.

Core-earnings posted good growth over 2011 with revenue increasing at the higher rate of 9% compared to growth in expenses of 4%. In the current quarter, the bank recorded a mark to market loss of Rs. 46 million in contrast to the gain of Rs. 36 million recorded in the corresponding quarter of the previous year. Loan loss provisions which comprises specific provision write-back and a general provision charge in line with asset growth for the quarter was comparatively higher than the previous period which recorded reversals on both categories.

Net interest margins were challenging yet again with rising cost of funds and intensifying competition.

Timely intervention in pricing across asset and liability portfolios and growth in business volumes resulted in net interest income recording a growth of 9% over the previous year. Non funds based (NFB) income too recorded a 9% growth over the previous period. Trade finance income recorded a drop due to IPO guarantee commission income generated during the previous period being absent in the current period.

Credit cards recorded good growth of 29% stemming from acquiring commission income and card fees. Both local and destination spend increased over 20% compared to the 1Q of 2011 with the number of new cards issued doubling. Forex income also recorded a notable growth as a result of currency volatility in the market. A sizeable vacuum was created in NFB income as trading losses were recorded on the FIS portfolio for the current period compared to gains recorded for the previous period. The continuous upward movement in the yield curve negatively impacted the FIS trading portfolio which has been mitigated to some extent by shortening its duration.

The bank continued to manage costs, curtailing the increase in expenses to 4% despite rolling out an expansion strategy with investments made in people, premises, systems and the NTB brand.

Group cost income ratio stood at 60% on par with the previous period. Cost efficiency and productivity has taken a predominant role in the day to day operations of the bank with initiatives being implemented not only to reduce waste and consumption but also by exploring ways and means of inculcating a culture of working smarter amongst employees across all functions.

The bank also took the first step in initiating the move into a paperless boardroom.