15 Aug 2022 - {{hitsCtrl.values.hits}}
Nations Trust Bank PLC (NTB), a unit of the John Keells group, saw its earnings for the quarter ended on June 30, 2022 (2Q22) coming down amid sharply up provisions on possible bad loans and expected losses on sovereign debt instruments, though the bank reported a significant growth in its operating income backed by solid core banking operations.
NTB reported earnings of Rs.3.72 per share for the quarter under review or consolidated earnings of Rs.1.12 billion, compared to earnings of Rs.5 per share or Rs.1.5 billion, a decline of 26 percent year-on-year (YoY).
The banking group reported a net interest income of Rs.7 billion for the quarter, up 109 percent YoY, as interest income rose faster than interest expenses. The net fee and commission income from its card business and digital banking operations rose 23 percent YoY to Rs.1.6 billion. The operating income for the quarter was Rs.9.06 billion, up 67 percent YoY, despite a net other operating loss Rs.3.25 billion.
The bank saw its loan book and deposit base growing at 12 percent each during the six months to June 30, 2022 to Rs.276.1 billion and Rs.299.2 billion, respectively.
The impairment charges for the quarter under review rose to Rs.4.4 billion, from just Rs.670 million a year ago, while for the six months such charges rose to Rs.6.7 billion from Rs.1.3 billion.
“Taking the external economic environment into consideration, NTB has increased impairment provisions on loans, advances and sovereign debt instruments, resulting in a 416 percent YoY increase in impairments,” NTB said in an earnings note. The bank’s bad loans ratio rose to 3.2 percent, form 2.09 percent six months ago, showing some deterioration in the asset quality.
The John Keells group owns nearly 30 percent of NTB while Central Finance Company PLC owns about 20 percent. The Central Bank of Sri Lanka (CBSL) had asked both parties to reduce their stakes to 20 percent and 15 percent, respectively by December 31, 2021. John Keells had further been asked to reduce its stake to 15 percent by December 31, 2022.
“Both John Keells Holdings and Central Finance have requested for an extension of the above deadline from the CBSL and is currently awaiting a formal response from the CBSL,” the notes to the financial statements said.
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