Nations Trust Bank saw its net profit fall 28 percent to Rs. 4.42 billion in the September quarter, as higher operating costs, a swing to a trading loss and a larger tax bill outweighed growth in lending and fee income.
Profit attributable to shareholders declined from Rs. 6.12 billion a year earlier, while earnings per share fell to Rs. 13.26 from Rs. 18.35, according to the bank’s interim financial statements. Profit before income tax fell 11 percent to Rs. 7.34 billion.
Group net interest income rose 20 percent to Rs. 11.78 billion. Interest income increased 37 percent, while interest expense climbed 56 percent. Net fee and commission income rose 41 percent to Rs. 3.29 billion.
The group recorded a net trading loss of Rs. 2.11 billion, compared with a gain of Rs. 791 million a year earlier. Total operating income still rose 14 percent to Rs. 14.96 billion, helped by higher interest and fee income and a recovery in other operating income.
The group booked a net impairment charge of Rs. 34 million, compared with a reversal of Rs. 945 million a year earlier. That limited growth in net operating income after impairment to 6 percent. Operating expenses rose 36 percent to Rs. 5.70 billion, led by higher staff and other operating costs, while income tax expense increased 38 percent to Rs. 2.92 billion.
At bank level, standalone net profit fell 23 percent to Rs. 4.67 billion. Nations Trust said costs associated with its acquisition of HSBC Sri Lanka’s retail banking business and initial provisions on the acquired portfolio weighed on the quarter. The Rs. 21.78 billion cash acquisition was completed on 1 May, and the group was still finalising the purchase price allocation at the end of September.
For the first nine months, group net profit rose 34 percent to Rs. 19.98 billion, even as pre-tax profit was broadly flat at Rs. 21.82 billion. The increase in net profit came from a lower income tax charge, which fell to Rs. 1.84 billion from Rs. 7.00 billion. The first-half results included a one-off tax credit linked to the HSBC acquisition.
Standalone profit for the nine months rose 49 percent to Rs. 21.84 billion. The bank reported year-on-year loan growth of 36 percent, or Rs. 155 billion, a net interest margin of 5.40 percent and a net Stage 3 ratio of 0.72 percent. Its Tier 1 and total capital adequacy ratios stood at 12.80 percent and 16.17 percent, respectively.
