ECONOMYNEXT - Profits at Sri Lanka's Nations Trust Bank Plc grew a marginal 3 percent from a year earlier to 1 billion rupees in the September 2018 quarter, weighed down by higher provisioning for bad loans, interim results showed.
The bank reported earnings of 3.76 rupees a share in the quarter. In the nine months to end September, earnings were 3.51 rupees a share on a profit of 974 million rupees, down 7 percent from a year earlier, interim accounts filed with the Colombo Stock Exchange showed.
Nations Trust Bank ended 3.90 rupees higher at 89.90 rupees on Thursday.
"The bank...(withstood) multiple challenges as witnessed across the industry with increasing non-performing loans, tightening of liquidity and moderating credit growth which particularly hindered the performance for the quarter," Nations Trust Bank said in a statement issued to shareholders.
In the quarter, net interest income rose 24 percent from a year earlier to 3.9 billion rupees, as interest income grew 20 percent to 9.6 billion rupees and interest costs grew a slower 17 percent to 5.7 billion rupees.
Interest income recorded faster growth due to "increased growth in loan volumes and effective pricing of the loan book" the bank said.
Interest expense growth was lower "due to the higher drop in cost of funds in comparison to the previous period. Nevertheless, the Bank noted a gradual rise in its cost of funds with the increasing interest rate environment which prevailed during the third quarter of 2018".
Net fee and commission income rose 15 percent to 1.6 billion rupees with trade finance, syndication based facility fees and bancassurance fees contributing to a larger portion of the increase, the bank said.
Bad loans provisioning surged 659 percent to 1 billion rupees.
"Impairment charges for the current year increased as some portfolios of the loan book experienced cash flow stresses," the bank said.
Personnel expenses rose 11 percent to 1 billion rupees and other operational costs grew 23 percent to 1.3 billion rupees.
The bank reported gains of 0.4 million rupees from trading in financial assets, up from a 255.5 million loss a year earlier.
"Net trading losses dropped significantly during the period under review as customer and trading FX reported a higher growth rate coupled with the drop in the SWAP book and the resultant forward premiums," the bank said.
Nations Trust Bank's loan book expanded 18 percent from nine months earlier to 219.6 billion rupees at end September 2018.
The bank's deposit base had also grown by 18 percent during this period to 228.9 billion rupees.
The Tier I capital adequacy ratio was at 10.87 percent at end September 2018, above the regulatory minimum of 7.875 percent, and was slightly higher from 10.83 percent nine months earlier.
Total capital adequacy was 14.66 percent at end September, higher than the 13.89 percent ratio nine months earlier, and above the 11.875 percent regulatory minimum.
"Managing impairment has been a key area of focus for us during the past few months whereby we have reorganized our collection shops and hope to keep a close watch in the upcoming months and will continue to focus until the stress on selective portfolios stabilise," said Renuka Fernando, Nations Trust Bank's CEO.
The bank reported earnings of 3.76 rupees a share in the quarter. In the nine months to end September, earnings were 3.51 rupees a share on a profit of 974 million rupees, down 7 percent from a year earlier, interim accounts filed with the Colombo Stock Exchange showed.
Nations Trust Bank ended 3.90 rupees higher at 89.90 rupees on Thursday.
"The bank...(withstood) multiple challenges as witnessed across the industry with increasing non-performing loans, tightening of liquidity and moderating credit growth which particularly hindered the performance for the quarter," Nations Trust Bank said in a statement issued to shareholders.
In the quarter, net interest income rose 24 percent from a year earlier to 3.9 billion rupees, as interest income grew 20 percent to 9.6 billion rupees and interest costs grew a slower 17 percent to 5.7 billion rupees.
Interest income recorded faster growth due to "increased growth in loan volumes and effective pricing of the loan book" the bank said.
Interest expense growth was lower "due to the higher drop in cost of funds in comparison to the previous period. Nevertheless, the Bank noted a gradual rise in its cost of funds with the increasing interest rate environment which prevailed during the third quarter of 2018".
Net fee and commission income rose 15 percent to 1.6 billion rupees with trade finance, syndication based facility fees and bancassurance fees contributing to a larger portion of the increase, the bank said.
Bad loans provisioning surged 659 percent to 1 billion rupees.
"Impairment charges for the current year increased as some portfolios of the loan book experienced cash flow stresses," the bank said.
Personnel expenses rose 11 percent to 1 billion rupees and other operational costs grew 23 percent to 1.3 billion rupees.
The bank reported gains of 0.4 million rupees from trading in financial assets, up from a 255.5 million loss a year earlier.
"Net trading losses dropped significantly during the period under review as customer and trading FX reported a higher growth rate coupled with the drop in the SWAP book and the resultant forward premiums," the bank said.
Nations Trust Bank's loan book expanded 18 percent from nine months earlier to 219.6 billion rupees at end September 2018.
The bank's deposit base had also grown by 18 percent during this period to 228.9 billion rupees.
The Tier I capital adequacy ratio was at 10.87 percent at end September 2018, above the regulatory minimum of 7.875 percent, and was slightly higher from 10.83 percent nine months earlier.
Total capital adequacy was 14.66 percent at end September, higher than the 13.89 percent ratio nine months earlier, and above the 11.875 percent regulatory minimum.
"Managing impairment has been a key area of focus for us during the past few months whereby we have reorganized our collection shops and hope to keep a close watch in the upcoming months and will continue to focus until the stress on selective portfolios stabilise," said Renuka Fernando, Nations Trust Bank's CEO.
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