Sunday, November 13, 2011
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.
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