Nations Trust Bank PLC’s profit in the second quarter (2Q) more than doubled as earnings benefited from the acquisition of HSBC Sri Lanka’s retail banking business and a one-off tax credit, while lending and deposits expanded sharply following the transaction.
Group profit for the three months ended June 30 rose 133 percent to Rs. 10.99 billion from Rs. 4.71 billion a year earlier, according to the bank’s interim financial statements. Profit before tax, however, increased just 1 percent to Rs. 7.46 billion, highlighting the significant contribution from the tax benefit to bottom-line growth. The group recorded an income tax credit of Rs. 3.52 billion for the quarter, compared with a Rs. 2.66 billion tax expense a year earlier.
At bank level, second-quarter profit rose 175 percent to Rs. 12.69 billion, while profit before tax increased 26 percent to Rs. 9.13 billion.
The divergence between pre- and post-tax growth came after NTB completed its acquisition of HSBC Sri Lanka’s retail banking business on May 1. The transaction included customer loans, credit cards, deposits, employees and lease rights relating to the transferred branch network. The bank said its second-quarter performance included a one-off tax credit attributable to the acquisition.
The acquisition had a substantial impact on NTB’s balance sheet. The acquired portfolio included about Rs. 20.56 billion in credit-card receivables, Rs. 6.93 billion in overdrafts and Rs. 2.50 billion in term loans. NTB also assumed Rs. 131.74 billion of customer deposits. The cash consideration for the transaction was Rs. 21.78 billion, while provisional goodwill and identifiable intangible assets amounted to Rs. 22.19 billion.
The enlarged balance sheet helped drive total group assets 32 percent higher to Rs. 922.98 billion at end-June from Rs. 700.31 billion at the end of 2025. Loans and advances at amortised cost rose 26 percent to Rs. 541.89 billion.
Gross loans and advances reached Rs. 565.11 billion, up from Rs. 451.13 billion at end-December. Credit-card lending was among the fastest-growing categories, increasing to Rs. 48.80 billion from Rs. 27.96 billion, reflecting in part the HSBC portfolio. Domestic-currency term loans rose to Rs. 155.27 billion from Rs. 130.66 billion, while foreign-currency term loans increased to Rs. 98.84 billion from Rs. 72.15 billion.
Deposits also expanded significantly following the acquisition. Group deposits stood at about Rs. 687.95 billion at end-June, compared with Rs. 502.22 billion at end-December, an increase of 37 percent. The HSBC portfolio itself contributed Rs. 131.74 billion in customer deposits at acquisition.
The expansion in the core banking book was accompanied by higher operating income. Group net interest income for the first half increased 17 percent to Rs. 22.22 billion, while net fee and commission income rose 23 percent to Rs. 5.04 billion. Trading gains jumped to Rs. 7.99 billion from Rs. 2.05 billion a year earlier, providing another significant boost to earnings.
Operating costs also climbed as the bank absorbed a larger business. At bank level, operating expenses increased 39 percent in the second quarter, with personnel expenses rising 30 percent and other operating expenses climbing 54 percent.
For the first six months, group profit after tax increased 77 percent to Rs. 15.56 billion from Rs. 8.79 billion a year earlier. Profit before tax grew at a much slower 6 percent to Rs. 14.48 billion, again reflecting the impact of the tax credit on reported earnings.
NTB Chief Executive Officer Hemantha Gunetilleke said the first-half results reflected “the impact of a larger customer base, a stronger balance sheet and new growth opportunities,” adding that the HSBC retail acquisition would continue to augment the bank’s performance.
Asset-quality indicators remained relatively contained, although the net impaired-loan ratio edged higher. The group’s net Stage 3 ratio rose to 1.05 percent at end-June from 0.91 percent at end-December, while the gross Stage 3 ratio improved to 2.61 percent from 2.72 percent. The Stage 3 impairment coverage ratio declined to 59.98 percent from 66.69 percent.
Net interest margin narrowed to 5.58 percent from 6.05 percent at end-2025. Return on equity, however, increased to 31.33 percent from 21.86 percent, while the cost-to-income ratio improved marginally to 31.93 percent from 32.49 percent.
The balance-sheet expansion also reduced NTB’s capital buffers, although ratios remained above regulatory minimums. The group’s Tier 1 capital ratio fell to 12.76 percent from 19.61 percent at end-December, while its total capital ratio declined to 16.41 percent from 20.72 percent. The regulatory minimums are 8.5 percent and 12.5 percent, respectively.
