1 March 2019 11:27 am
The banking group reported earnings of Rs.2.76 a share or Rs.783.3 million for the three months ended December 31, 2018, compared to earnings of Rs.3.80 a share or Rs.931.2 million in the year earlier period.
The company’s share yesterday ended Rs.1.00 or 1.09 percent down at Rs.91.00.
The earnings at a company level recorded a much steeper 53 percent decline, as the provisions made for possible bad loans surged and margins came under pressure due to rising funding costs. The company yesterday announced a final dividend of Rs.2.10 a share in the form of a scrip dividend on its voting and non-voting shares.
The banks were seen widely cutting their cash dividends, and instead resorting to scrip dividends – dividends in the form of shares – in 2018 to retain profit to boost their equity due to the full implementation of BASEL III which came into effect on January 1, 2019.
Meanwhile, the banking group reported a net interest income of Rs.4.13 billion for the three months, up 18 percent year-on-year (YoY) on the back of a faster increase in interest cost surpassing the growth in the interest income.
Net interest income is the difference between the revenue generated from assets and expenses tied to liabilities.
The bank’s net interest margin changed little at 5.03 percent. Meanwhile, the bank reported total operating income of Rs.5.61 billion, up 13 percent YoY, which is also buttressed by a net fee income of Rs.1.54 billion, up 14 percent YoY.
However, much of those profits were erased by a significantly higher credit loss expenses which resulted from both the general stresses seen in the industry assets and the first time adoption of the new accounting standard – IFRS 09 – on financial instruments which demands higher provisions against loans and other financial assets.
The bank provided Rs.911.9 million as impairment against possible bad loans compared to an year earlier period’s Rs.344.0 million.
Meanwhile, the full year (FY18) provisions nearly tripled to Rs.3.15 billion.
For FY18, NTB reported earnings of Rs.13.10 a share or Rs.3.70 billion compared to Rs. 3.37 billion in 2017, a 10 percent increase YoY.
However, at the bank level, the earnings were down by 12 percent YoY reflecting the challenges faced by the lender.
The lender with assets of Rs.324.8 billion gave loans of Rs.38.1 billion with an increase of 20.4 percent in the loan book while the bank raised Rs.37.6 billion in new deposits translating into a 19.4 percent growth.
The gross non-performing loan ratio – the crucial gauge of a bank’s asset quality – deteriorated to 4.58 percent from 2.29 percent a year ago.
Meanwhile, the bank yesterday announced plans to issue 35 million subordinated debentures at Rs.100 each to raise Rs.3.5 billion to beef up its total capital base and support future lending.
As at December 31, 2018, John Keells Group held 29.6 percent stake in NTB.