Nations Trust Bank plc (NTB) in the financial year ended December 31, 2010 saw gross income decline by 13% year on year (YoY) to Rs. 12.2 billion, however net interest income grew by 23% YoY to Rs. 4.6 billion while profit after tax in the review period grew by 58% YoY to Rs. 1.1 billion.
Ajit Gunewardene, Chairman NTB, in his review said that from an industry perspective, banks’ non performing loans portfolio (NPLs) which recorded 8% in 2009, declined to 5.3% last year.
He further said that from an NTB perspective, despite narrowing margins, net interest income grew by 23% which signified the growth in core banking activities. Non fund based income grew by 7% YoY.
“Despite a slow revival of the economy, your bank managed to grow its business well above industry average and improve its market share to narrow the clear water gap between NTB and peer group banks in the bigger league, “ Gunewardene told shareholders.
The bank’s balance sheet grew by 18% during the year. Deposits and advances grew by 9% (to Rs. 48 billion) and 26% respectively. NPLs declined from 8.5% to 4.9% YoY as a result of prudent credit risk management, stringent monitoring and recovery efforts, said Gunewardene.
CEO Saliya Rajakaruna in his review said that though interest income declined by 16% due to the downward revision of rates, that was more than set off by a 34% reduction in borrowing costs. Although margins suffered as a result of the dip in interest rates and resulting lower revenue levels, cost of funding was closely managed to mitigate the effect, he said. During the year NTB’s assets reached Rs. 83 billion with gross loans and advances growing by 24% (Rs. nine billion) of which almost 50% was extended in the last two quarters. The bank’s net loans and advances portfolio stood at Rs. 44.6 billion. NTB’s capital position was increased to Rs. seven billion, enabling it to report a healthy capital adequacy ratio of 15.7%.
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