Nations Trust Bank Group demonstrated strong resilience amid external challenges, to record a profit of Rs 3.71 billion, a marginal increase over the previous year. Total Operating Income increased by 6% to Rs 22.5 billion.
Subdued economic conditions which prevailed in the country affected many key economic sectors impacting the financial performance of businesses leading to low credit growth and higher non-performing loans. The Easter Sunday terrorist attacks and the election momentum further exerted pressure on credit growth in the industry.
Commenting on the results and achievements, Renuka Fernando, CEO/Executive Director stated “Despite the headwinds present in the operating environment, our fourth quarter witnessed an improved performance over the previous quarters of 2019, which is encouraging. With a cautious approach in growing the assets book, we remain committed to delivering our strategic agenda set at the beginning of the year to strengthen our digital capabilities, with the ultimate intention of achieving cost efficiencies, pioneering innovation and thereby challenging the norm to deliver an unparalleled banking experience to our customers”.
Amidst moderation in credit growth, the Group pre-tax profits recorded a 9% increase over the previous period whilst post-tax profits dropped to the previous year level largely due to the full impact of the Debt Repayment Levy in 2019. The Bank’s post-tax profits recorded a drop of 8% due to the inter-company dividend income recorded in the corresponding period of 2018.
Due to the prevailing challenges in the economy, the Bank followed a cautious approach in expanding its advances portfolio, which contributed to a slowdown in the loan book to a 2 % growth leading to a moderated net interest income (NII) growth of 6%. Lending rates ceiling imposed during the year also added to the slowdown in the NII growth while the reduction in Statutory Reserve Ratio from 7.5% in 2018 to 5% in March 2019 contributed towards defending the pressure on the NII growth.
Whilst credit cards, trade and deposit related fee-based income recorded moderate growth, lending-related fees recorded a drop owing to lower business volumes. Net trading losses arising from funding swaps due to the appreciation of the Sri Lankan Rupee during the period is largely negated by the revaluation gains arising from balance sheet positions accounted under Net other operating income.
Sri Lankan Rupee appreciated against the US Dollar by Rs 1.55 in 2019, in complete contrast to the depreciation of Rs 29.4 recorded in 2018. The Bank continued to benefit from the relatively lower funding costs of the funding swaps compared to high-cost rupee deposits.
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