Nations Trust Bank delivers a solid June quarter

Nations Trust Bank PLC reported a solid June quarter performance, as it improved almost every key performance indicator, although the bank is still kicking into gear with respect to more meaningfully reopening its lending spigots.
The bank reported a net interest income of Rs.8.96 billion for the April-June quarter, up 2 percent from the same period last year, quite opposite from what almost every other bank showed in this line of the income statement.

The bank reported earnings of Rs.13.03 a share or Rs.4.25 billion for the same period, compared to Rs.10.20 a share or Rs.3.33 billion in the same period a year ago. The bank’s share ended 1.69 percent or Rs.2.00 a share higher at Rs.120.0 yesterday before the interim report was released. The bank gave loans worth of Rs.4.09 billion and raised deposits valued at Rs.1.53 billion. The growth in loans has come entirely from the foreign currency loans, as the rupee loans have contracted, including its sizable credit card business, which carries an outstanding balance of Rs.24.2 billion. The bank is the issuer and sole acquirer of the American Express cards in the country, commanding the market leadership in the premium segment. The bank meanwhile managed to maintain its net interest margin at 7.15 percent, down little from 7.72 percent at the start of the year. The bank reflects fine management of assets and liabilities during the period, as it largely has maintained its margins while its rupee loans have contracted, all the while the rates were coming sharply down in the market.
The bank’s impaired loans or stage three ratio is at the lowest level at 2.14 percent, a distant outlier in the industry in terms of maintaining asset quality at elevated levels, despite the industry coming under severe pressure in the last two years.

The bank meanwhile generated a fee income of Rs.2.28 billion for the quarter, up 31 percent from the same period last year.
The bank, quite similar to many other banks, has also reported a trading gain of Rs.2.21 billion, compared to a loss of Rs.1.38 billion in the year earlier.  
Meanwhile, the bank provided only half or Rs.419.9 million as provision for possible loan losses and other losses in the quarter, from Rs.854.6 million in the same period last year.
The banks were becoming more confident about their clients than perhaps six months ago, as the economy turned a corner and the rates were coming down sharply.
The bank could perhaps become a bit more aggressive in its loan growth in the ensuing quarters, given the favourable circumstances.