NTB sees strong 4Q performance, boosted by ISB provision reversal

Sherin Cader – Chairperson

Hemantha Gunathilleke - CEO

Nations Trust Bank PLC posted a strong financial performance for the three months ending December 2024, fueled by a large provision reversal from its International Sovereign Bond (ISB) investments and a solid core banking performance, as demand for new loans continued to rise.

The bank reported earnings of Rs.14.02 a share or Rs.4.64 billion for the October – December quarter, up 128 percent from Rs.6.15 a share or Rs.2.03 billion in the same period in the year earlier period.

The bank recognised impairment reversal of Rs.3.57 billion for the quarter compared to impairment provisions of Rs.2.97 billion reported in the year earlier period.

The reversal appears to be predominantly coming from the provisions the bank had made for their investments made in ISBs.

The bank did not separately show what took place for the bank’s provisions in respect of its loans and advances and other financial assets.

There was however a corresponding net loss of Rs.3.42 billion in the quarter which may have arisen from the difference between the carrying value of the old bonds and the fair value of the new bonds which is recognised as the day-1 loss.

Reflecting improved asset quality, the bank reported a  Stage 3 loans ratio of 1.60 percent, down from 2.34 percent a year ago.

The bank has given loans worth Rs.16.28 billion for the full year, taking its total outstanding loan book to Rs. 308.86 billion by the end of the year.

The bank ended 2024 with a total asset base of Rs. 545.44 billion.

The bank’s card base, predominantly comprising of Amex credit cards, slipped from Rs.26.15 billion to Rs.24.42 billion, reflecting that even the premium card holders have cut down on spending last year.

Meanwhile, the deposits have grown by Rs.35.25 billion for the year, bringing the total deposit base to Rs.384.78 billion.

The bank reported a net interest income of Rs. 9.28 billion for the three months through December 2024, up 9.0 percent from a year ago while the net fee and commission income also rose by 8.00 percent to Rs.2.16 billion.
The net interest margin – the spread between what a bank pays for its deposits and what it receives from its loans – narrowed slightly to 6.94 percent from 7.72 percent at the start of the year.

NTB remains an outlier in the banking sector in Sri Lanka for its higher net interest margins due to its outsize credit card portfolio and also high margin loans.

Commenting on the financial performance, the bank’s Chief Executive Hemantha Gunathilleke emphasised on its solid capital buffers, liquidity levels and effective risk management capabilities among other things for its robust performance.