Aug 07, Colombo: The Nations Trust Bank closed the 6 months period ending 30th June 2018 with a post-tax profit of Rs.1.875 billion and a pre-tax profit of Rs. 3.882 billion underpinned by good growth in business volumes and improved operating margins.
Despite increased impairment charges slowing the bottom line growth, the Bank recorded a resilient performance in the back drop of industry witnessing tightening of market liquidity, moderating credit growth and increased non-performing loans during the first half of the year.
Net interest income increased by 35% mainly attributable to growth in volumes with a marginal improvement in NIMs. Interest income recorded a faster growth of 26% over interest expense growth of 20% due to the higher drop in cost of funds over the previous period.
Non fund based income including fees, commission and other operating income increased by 18% with trade and transactional fees contributing to a larger portion of the increase. Net trading losses, which mainly comprise of cost on funding swaps, remained at previous year reported levels as there had been no material movement in the SWAP book and forward premium rates in comparison to the previous period. Customer FX income reported a moderate growth of 16% with the volume growth.
Impairment charges for the current year increased due to cash flow stress witnessed in selective portfolios which is also reflected in the increase in the NPL ratio to 3.06% from 2.29% reported in December 2017, mirroring industry trends. Industry NPLs stood at 2.50% in December 2017 increasing to 3.30% by end May 2018.
Expenses recorded a growth of 20% which is partly due to the front loading of certain expenses particularly related to branding, marketing activities and investments made on up-skilling of knowledge, employee engagement and culture building. Investments made in technology and digital platforms during the second half of 2017 also had a direct bearing in expenses growth in the current year. Expenses pertaining directly to business volume growth were well managed at 9%.
Notably, the Bank reported a higher growth in revenue of 30% to commensurate expenses growth resulting in the Cost: Income ratio decreasing to 48.6% from 52.8% reported in the previous period.
Loans and advances recorded a growth of 12% primarily driven by corporate portfolio lending. Deposits recorded a growth of 16% while CASA grew by 15%. CASA mix was maintained at 28%.
Renuka Fernando, CEO, Executive Director said, "It has indeed been a resilient performance across the enterprise as we were able to balance business growth amid fast changing market dynamics whilst pursuing strategies we embarked at the beginning of the year for future business transformation. As we celebrate our 19th year of operations crossing many significant milestones along the way, the future holds much promise and I look forward in concluding yet another rewarding year."