NTB continues growth momentum
NTB closed the first half with a post tax profit of Rs. 893 million
surpassing the comparative period of last year by 21 %. Core-earnings
posted good growth over 2011 with revenue increasing at a higher rate of
13 % compared to an expense growth of 11 %.
The performance was primarily driven by four strategic business units
comprising of Retail & SME, Credit Cards, Corporate Banking and Treasury
which recorded both volume growth and profit growth for the period.
Leasing also performed well despite industry wide challenges arising
from the changes in the import tax structure for vehicles. The bank
continued to progress well in diversifying its portfolio and earnings
base while optimizing returns in a controlled growth environment.
Maintaining net interest margins across the businesses were
challenging due to the rising cost of funds and intensifying competition
for deposits.
Timely intervention in pricing the asset and liability portfolios and
growth in business volumes across all businesses mitigated margin
pressure to a great extent and resulted in net interest income recording
a growth of 11 % over the previous period.
Non fund based income recorded a robust growth of 16 % over the
previous period.
Changes to import tax regulations coupled with the depreciation of
the rupee curtailed imports volume, and impacted the bank’s trade
finance income.
Credit card income recorded a commendable growth of 32 % stemming
from both the acquiring and issuing businesses.
Both local and destination spend increased by over 25 % compared to
the 1H of previous year driven by significant expansion in the bank’s
card issuances. Forex income also recorded a notable growth as a result
of currency volatility in the market.
The bank continued to manage costs, curtailing the increase in
expenses to 11 % despite investments made in expanding the delivery
network and building the brand. No material shifts were seen in the cost
composition for the year.
Group cost income ratio stood at 59 % on par with the previous
period. Continuous emphasis has been made to improve cost efficiency and
productivity across the key cost lines, processes and functions of the
bank. After 6 months of rigorous process re-engineering and improvements
, the bank is currently reaping the benefits with substantial savings
generated from identified expense lines. As part of its focus on cost
efficiency and productivity measures, the bank also took the first steps
in digitalizing a number of its internal processes starting from the
boardroom. With the introduction of the iPad Board Application, the bank
eliminated costs in terms of paper usage, printing and couriering whilst
giving Board Members access to all past and current board papers at the
click of a button, enabling both simpler and faster decision making. A
number of other similar projects have commenced across the organisation.
A sound credit risk management framework in the bank ensured a
healthy NPL ratio of 2.91 % compared to 2.79 % reported in December
2011. Loan loss provisions which comprises of specific provision
write-back and a general provision charge in line with the asset growth
for the quarter was comparatively higher than the previous period which
recorded reversals on both categories.
The bank also managed to grow its loan book by 13 % to Rs 71billion
and deposits by 22 % to Rs. 81billion. Whilst the loan growth was on par
with industry, deposit growth exceeded the market. A significant portion
of the funding of the asset book was through deposits which also
improved the Loans to Deposit ratio, bringing in increased stability to
the balance sheet.
Driving low cost deposits continued to be challenging with such
deposits contributing to only 11 % of the growth recorded for the six
months period. The rising interest rates have resulted in a steep shift
towards term deposits with customers opting for higher returns on their
regular savings and investments. The bank launched a savings campaign to
reward customers across the branch network and has seen steady positive
results
The capital position was at a sound Rs. nine billion with Capital
Adequacy Ratios both at tier 1 and 2 maintained at comfortable levels.
In line with the strategy of expanding customer touch points to
enhance accessibility and convenience, the branch network expanded its
footprint by opening four new branches in Nelliyadi, Kaduruwela,
Aluthgama and Wennappuwa. Two SME business centres were also opened in
Kurunegala and Anuradhapura with the SME Toolkit being offered at these
centres. Several ties –up were established with remittance houses across
the globe and the Retail team made numerous visits to the Middle Eastern
and European countries to enhance relationships, and promote the Nations
Trust brand as a key player to the Sri Lankan expatriate population.
The bank also received recognition and accolades during the six
months under review. NTB was the proud recipient of the Award for the
best private bank in Sri Lanka, presented by World Finance. NTB Annual
Report for 2011 won the Silver Award in the banks (Asia Pacific)
category for the third consecutive year at the US based LACP Vision
Awards.
Saliya Rajakaruna, Director/CEO said “We have recorded a noteworthy
financial performance in the 1H with growth and earnings equally
distributed across the business pillars. We anticipate bigger challenges
in the 2H in the back drop of curtailed credit growth, but remain
focused in achieving the goals set for the year. While it is business as
usual for our front-end units, our support units are working
relentlessly to create the processes, controls and the compliance
platform required to uplift the Nations Trust brand to become a
nationwide bank synonymous with sustainable growth”. |