NTB growth momentum continues

Nation Trust Bank closed the year with post tax profit of Rs 1,951million surpassing the comparative period of last year by 21%. With the macroeconomic conditions being conducive for business, the bank managed to improve performance in all areas notably in deposit mobilization and core earnings in a controlled credit growth environment. All business segments put up solid performances and contributed evenly to the bottom line. Specific challenges faced during the early part of the year with the rising interest rate scenario, devaluation of the currency and the changes in the import tax structure for vehicles was well managed with prudent positioning of portfolios and timely execution of alternate strategies.

Arjuna Gunaratne, Chairman - Nations Trust Bank	Renuka Fernando, Director / CEO - Nations Trust Bank

Across the industry NIMs depleted due to the rising cost of funds and intensifying competition. For Nations Trust in particular the impact of rising cost of funds was greater due to having a relatively lower CASA balance and a disproportionately high share of customer assets being subject to interest rate ceilings.

Internal pricing strategies to balance risk and reward on customer assets were reviewed frequently to manage the margin pressure whilst the mobilization effort on deposits continued with emphasis given to acquire low cost deposits. Despite interest costs increasing at a faster rate than interest income and narrowing NIMs, the growth in business volumes compensated for the negative impact as net interest income for the year recorded 31% compared to previous period.

Non fund based income recorded a robust growth of 26% over the previous period. Primary drivers of NFB income growth was credit cards at 36% and fees and commission income from loans and deposits at 30%.

The growth in these areas reflected the conducive macro economic factors which prevailed during the year with increased consumer spend and transactional mobility.

In contrast, changes to import tax regulations coupled with the depreciation of the rupee curtailed imports volume, and negatively impacted Trade Finance income which recorded a drop of 17% over previous year.

The bank managed to convert opportunities arising from the movement in the yield curve towards the latter part of year recording trading and mark to market gains on the FIS book amounting to Rs 90 million.