Nations Trust Bank sespite subdued economic conditions due to the pandemic, the group recorded a Profit Before Tax growth of 39% for the 3 months ended 31st March 2021 compared to previous year.
Net Interest Income continued to decline primarily due to the reduction in the market interest rates while interest rate ceilings introduced by the regulator impacted some business portfolios. Yields on loans reduced by 370bps in line with the fall in AWPLR by 350 bps supporting the loan growth and the economic recovery efforts.
A reduction in yields in the FIS portfolio, after the profits taken on the high yielding securities, further aggravated the net interest income decline. However, the improvement of CASA ratio to 35% as at end March 2021 from 29% as at end March 2020 helped partially offset the decline in interest margins during the period.
Concentrated focus in underwriting and loan recoveries resulted in positive flows in the past due buckets while bringing the exposures down in most risk buckets. Further, relaxation in directions issued on leasing asset recoveries also supported these efforts. This is reflected in 1 percentage point decline in the non-performing loan ratio and improvement in impairment charges compared to the same period last year, with a year on year savings of 16%.
The cost management culture entrenched across the organization assisted to curtail cost by LKR 186Mn, with a 7% saving over last year. Continuation of some of the cost saving strategies and initiatives executed last year along with productivity, efficiency drives and focus on some of the large cost pools were the main reasons for the favorable variance. The Return on Equity before the exceptional tax adjustment stands at 16.3% for the period under review, compared to 12.8% recorded in 2020. The Bank declared a final cash dividend of LKR 2.00 per share for the year ended 31 December 2020, giving adequate consideration to the capital required to support the growth of the bank.
Commenting on the results and achievements, Priyantha Talwatte, CEO/Director stated “while we are aware that we are still operating in a pandemic related subdued environment with strong headwinds specially with a probable outbreak of a third wave, the team will continue to adjust well and support the implementation of our revival strategy whilst assisting the Sri Lankan Government initiatives and supporting both customers and the economy for a speedy recovery”.
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