NTB June quarter hurt by bad loans, weak new loans growth

Nations Trust Bank PLC (NTB) reported lower profits for the period ended June 30, 2019 (2Q19) as the margins narrowed while sour loans rose as the bank became a yet another victim of the hobbling economy and weak sentiments. 

NTB reported earnings of Rs.2.26 a share or Rs.641.2 million for the April–June quarter compared to Rs.3.30 a share or Rs.936.2 million reported for the year earlier period, registering a decline of 32 percent year-on-year (YoY).

The bank’s share ended Rs.1.50 or 1.76 percent lower at Rs.83.70 yesterday. 

The bank reported net interest income of Rs.3.9 billion for the three months, up 10 percent YoY.

The interest expenses rose faster than the interest income while net interest margin narrowed to 4.84 percent from 5.03 percent at the beginning of the year. 
Until recently NTB enjoyed the highest interest margin among licensed commercial banks due to its larger leasing and credit card business. 

The bank’s gross non-performing loans ratio rose to 6.11 percent from 4.58 percent, quite an unusual territory for a bank like NTB which has had a good track record in asset quality. 
The bank’s loans grew by Rs.11.1 billion or 5.0 percent during the six months. By end of June 30, 2019 the bank had a loan book of Rs.239.1 billion. 

The provisions made for possible bad loans nearly doubled to Rs.1.3 billion for the quarter from Rs.709 million in the corresponding quarter last year. 

Meanwhile, the deposits barely grew by 0.6 percent or Rs.1.4 billion to Rs. Rs.233.3 billion. 

For the six months ended in June 30, 2019, the bank reported earnings of Rs.4.98 a share or Rs.1.4 billion, down 25 percent YoY. 
The net interest income for the period was Rs.7.82 billion, up 9.0 percent YoY. 

Despite the weak performance, the bank will pursue a cautious approach in growing its lending book with a greater focus on recoveries, the bank’s Director/CEO Renuka Fernando said. 
“All our efforts and focus are to record an improved performance in the second half of the year with focused strategies towards better recoveries and lower impairment provisions,” she said. John Keells group has 29.56 percent stake in NTB.