Nations Trust Bank Posts Profit Of Rs 1,157 m In 2H

The Nations Trust Bank closed the first six months ending June 30 2014 with a post-tax profit of Rs.1,157 mn recording a growth of 18% over the corresponding period in 2013.

Core revenue recorded a faster rate of growth over operating expenses, thereby significantly improving operating margins. However, higher impairment charges and introduction of new tax levies slowed bottom line growth over the corresponding period. Performance for the quarter was up by 27% in terms of post tax profit. The improved performance in the current quarter is mainly attributed to lower impairment charges compared to that reported for the first quarter 2014. The Bank also witnessed slow growth in loans and advances particularly in the corporate portfolio. The lackluster demand for credit amidst a relatively low interest rate regime prevailed across the industry during the first six months of the year and the Banking sector recorded a contraction in loans and advances partly attributable to the significant decline in pawning advances.

Impairment on the pawning portfolio in the 1H of 2013 has been comparatively lower since the sharp decline in the market price of gold began only in April 2013. Since then, the Bank's exposure to pawning has been managed below 2.0% of the overall loan book whilst the loan to value ratio has been appropriately adjusted to manage the volatility in the market value of gold. As such, the trend in impairment on the pawning portfolio is expected to improve in the 2H of 2014. Bank has also undertaken appropriate measures to strengthen its credit card recovery process to arrest further impairment thereby stabilizing the portfolio in the 2H of 2014.

The capital position was sound at Rs.14.8 bn with Capital Adequacy Ratios, despite a drop over December 2013 were maintained at comfortable levels. The drop is mainly attributable to the dividend pay-out impacting retained earnings.

Director and CEO Renuka Fernando said the first half results demonstrate a resilient performance withstanding multiple industry challenges. "We anticipate a possible turn around in demand for credit in the second half of the year with the positive outlook on key macro-economic indicators. A significant amount of resources and effort across the organisation have been deployed for the core banking upgrade project and much progress have been made thus far. The completion of it will give us the technological capabilities to steer Nations Trust Bank through its next phase of growth in a digitalized environment.