Rising funding costs, hefty credit costs and slowdown in new loans dented Nations Trust Bank PLC’s (NTB) September performance as the mid-size lender wasn’t spared from the recent headwinds experienced by the industry.
NTB reported 7 percent year-on-year (YoY) growth in its net operating income to Rs.4.5 billion for the three months ended September, 2018 (3Q18) and the profit before tax fell 3.0 YoY percent to Rs.2.02 billion.
The bank’s loan growth during the three months showed signs of slowing down.
The bank gave new loans worth of Rs.11.1 billion during the quarter after growing the portfolio by Rs.24.1 billion during the first half.
The bank has a loan book of Rs.222.3 billion.
Meanwhile, the bank was only able to grow its deposit base by Rs.3.9 billion for the three months. This is after a Rs.31 billion growth recorded in deposits during the first six months.
However, the recent fund raisings by way of a Rs.3.2 billion rights issue and the US $ 50 million received from FMO, an international funding line, may have helped bridge the difference.
Meanwhile, the bank’s net interest income rose by 24 percent YoY to Rs.3.9 billion.
However, NTB in an earnings release said the bank experienced, “a gradual rise in its cost of funds with the increasing interest rate environment which prevailed during the third quarter of 2018”.
The bank with roughly Rs.320 billion in assets reported earnings of Rs.3.76 a share for the quarter under review compared to Rs.4.24 a share reported a year ago, a decline of over 11 percent.
NTB provided hefty provisions for possible bad loans during the period.
The provisions made for some selected individual clients stood at Rs.259.8 million compared to Rs.93.2 million a year ago. The provisions made for the general loan portfolio was as high as Rs. 795.5 million compared to Rs.45.8 million a year ago. The gross non-performing loan ratio was also steeply up from 2.29 percent at the beginning of the year to Rs.3.71 percent by September.
Meanwhile, for the nine months ended September 2018, NTB reported earnings of Rs.10.57 a share compared to Rs.10.22 a share a year ago, up 3.4 percent.
The net interest income for the period was Rs. 11 billion, up 31 percent YoY.
As at September 30, 2018, John Keells group held 29.8 percent stake in NTB.
Norges Bank—the central bank of Norway—being the 14th largest shareholder increased its stake in the bank during the three months from little over 1 million shares to 1.8 million shares or 0.75 percent stake.