NTB maintains growth momentum

At the group level, NTB closed the 9-month period ending 30th September 2011, with
post-tax profits of Rs.1,170 Mn, up 38% over the corresponding period in 2010, while
pre-tax profits grew from Rs. 2, 020 Mn to Rs. 2, 127 Mn, an increase of 5%.
Group net interest income was below the previous year due to narrowing margins
which was anticipated for the current year and visible across the industry. Its impact,
however, was mitigated by the sustained growth in business volumes especially in the
2nd and 3rd quarters, timely re-pricing of deposits and a shift in the deposit mix
towards low cost funds.

Non-funds based income from all core lines of business including credit cards, trade
service and treasury service businesses recorded good growth against the previous
year. Impact  of the  reduction in corporate and  personal taxation was  reflected in
increased import/export business volumes and consumer spending together with
increased tourist arrivals bolstered these growth levels. Trade finance volumes, both
on imports and exports picked up significantly compared to the previous year with the
resultant income increasing  by  28%.  Credit  card  related  non-fund  based income
recorded  healthy  growth for the  period  under  review  due to increased consumer
spend and the roll out of new card acquisition programs. Foreign exchange income
too  showed  significant  growth  despite  the  relatively  stable  exchange  rate  that
prevailed during the period.

During the period, group operating expenses recorded an increase of 5% over the
corresponding period in 2010. The increase is in line with the expansion drive initiated
in the latter part of 2010 where investments were made in people, premises and
systems to support the growth prospects and strengthen risk management. Five new
branches were opened during the 9 months to September 2011with 4 more to be
opened  before  the  year  end.  The  increase  in  operating  expenses  also  reflects
investments made during the period to strengthen the NTB brand. As a result the
group  cost  income  ratio  increased  from  55%  to  59%  over  the  previous  period.
However  lower  tax  rates  applicable  for  the  current  year  resulted  in  the  higher
post tax profit.

Group NPL Ratio stood at 3.45% compared to 4.82% recorded in December 2010 and
4.8% in June 2011. Growth in the loan book through prudent credit underwriting
assisted in lowering the NPL Ratio, despite the upward pressure via a more stringent
regulatory environment in  respect of NPL classifications coming into force at the
beginning of the year. Focused management of collections is reflected in provision
reversals during the period.

For  the  period  under  review,  gross  loans  and  advances  recorded  a  growth  of
Rs. 12.3Bn up 26%. On a YOY basis, the uplift by 30th September 2011 was over 30%
distributed across various industry segments with no particular concentrations. Such
growth  in  loans  was  supported  by  the  deposit  base  increasing  by  Rs.12Bn  to
Rs. 61Bn, recording a growth of 25% for the year with low cost deposits growing at a
healthy pace of 20%.

In terms of capital, the position strengthened to Rs.8.2Bn with the conversion of the
2nd tranche of warrants leading to a comfortable Group Capital Adequacy Ratio of
14.01%.  The  Bank  also  concluded  an  unsecured  subordinated  debenture  issue
amounting Rs. 2Bn in readiness for further expansion of the loan book.