Higher loan loss provisions hamper NTB 2Q

The higher loan loss provisions hit Nations Trust Bank PLC’s (NTB) profits although the bank managed to record a decent growth in new loans amid some solid growth in new deposits. 

According to the interim accounts released to the Colombo bourse for the April-June quarter (2Q18), NTB reported earnings of Rs.3.14 a share or Rs.872 million in total earnings, down 16 percent from the same period, last year. 

However, at group level, the bank managed to increase the earnings by 33 percent year-on-year (YoY) to Rs.3.37 a share or Rs.936.2 million. 

The bank recorded a net interest income of Rs.3.6 billion for the three months, up 29 percent YoY, helped by some decent growth in new loans and margins, which remained at 5 percent, virtually at the same level, last year.

The mid-sized lender with assets of little over Rs.300 billion gave new loans to the tune of Rs.24.1 billion during the six months to June 30, recording a growth of almost 13 percent. 

The bank on a standalone basis had a loan book of Rs.211.2 billion.

However, NTB also fell victim to the weakening asset quality as 3.06 percent of those loans were categorized as non-performing loans, up from 2.29 percent, last year. 

The bad loan provisions made for individual clients rose to Rs.164.1 million, from Rs.100.2 million a year ago, while the provisions made for the entire loan portfolio rose to Rs.544.9 million, from Rs.322.9 million a year ago. 

For the six months to June, the bank had to provide close to Rs.1.2 billion in total provisions, against Rs.601.2 million during the same period, last year. 

Meanwhile, NTB recorded some solid growth in new deposits as they grew by Rs.31 billion or 16 percent to Rs.225.3 billion. 

During this period, the bank also raised Rs.3.2 billion in a rights issue to cushion its capital profile while funding its growth. 

For the six months ended on June 30, 2018, the banking group reported earnings of Rs.6.82 a share or Rs.1.88 billion on a net interest income of Rs.7.2 billion, up from Rs.1.4 billion in earnings and Rs.5.3 billion of net interest income reported for the corresponding period, last year.  

As at June 30, 2018, the John Keells group held a 29.9 percent stake in NTB, while HWIC Asia Fund and Central Finance Company PLC held 15.0 percent and 9.98 percent stakes, respectively.  

Janashakthi General Insurance Limited also held an 8.06 percent stake being the fifth largest shareholder of NTB.