The Group achieved a record Profit Before Tax of LKR 10.4 billion, for the twelve months ended 31st December 2021 – a growth of 38% compared to the previous year, despite the challenging operating environment experienced during the period. The Group recorded a Profit after tax growth of 65% supported by the decrease in the corporate tax rate.
The loan book recorded an 18% growth during the year against the private sector credit growth of 13.5%.
Nations Trust Bank adopted a selective expansion strategy, pursuing growth opportunities in sectors such as exports and local manufacturing which are aligned to the national development agenda while recording growth in the renewable energy and agriculture sectors. The Bank continued to focus on supporting customers through the crisis, proactively engaging and offering customised financing solutions to ensure commercial viability. The Bank also strengthened one-to-one engagement with customers, offering individual plans for repayment and providing guidance on effectively managing cashflows.
The Bank extended its fullest support in the implementation of the Government’s initiatives to minimise the impact of COVID-19 on businesses and the community and to stabilise the economy by partaking in the ‘Saubhagya’ loan scheme. Over LKR 20 billion new credit facilities were disbursed by the Bank under its own revival fund “Nations Diriya” scheme, which is dedicated to extending financial support to key industries, enabling such businesses to recommence and rebuild their business operations.
The Consumer Banking Division adopted a lifecycle approach to lending, moving away from a product push and offering customer-centric, relevant solutions based on specific needs. The Bank strengthened its digital offering to its customers, launching the Nations Direct integrated cash management system for corporate and commercial customers. This included tailormade offerings and host-to-host solutions, among others.
Nations Trust Bank raised USD 65 million from overseas Development Finance Institutions during the year to support the Small and Medium Enterprise (SME) sector, demonstrating the strength and track record of the Bank despite the volatile environment. The Bank also raised LKR 4 billion, Fitch ‘A’ rated, Senior, Unsecured, Unlisted, Redeemable Debentures, in July 2021, further strengthening the medium-term funding profile of the Bank.
Supporting the loan growth and economic recovery efforts, average yields on loans reduced by 260 bps during the year. A net reduction in yields in the FIS portfolio also contributed to the decline in net interest income. The absence of a one-off interest reversal on moratorium loans similar to what was recognised in the previous year helped negate the decline in interest income. The improvement in the CASA ratio to 40% as at end of the year, from 32% recorded in the previous year, helped partially offset the decline in interest margins during the period.
Momentum could be seen in Trade Finance related income with the increase in certain Trade Finance related activities. Growth in cards income was contained on account of a decrease in card spend due to changes in customer behavior patterns owing to the restrictions in mobility and overseas travel during certain parts of the year. Suspension or refund of certain charges by the Bank, considering the current difficulties faced by customers due to the COVID-19 pandemic, negatively impacted the Bank’s fee-based income. While pandemic-led disruptions impacted credit card spending in certain months, the segment’s overall performance was upheld by the release of pent-up demand in other periods.
With the yield curve remaining flat for most part of the year, opportunities for generating capital gains through trading were limited. The Bank made conscious efforts to reduce the duration of the portfolio, repositioning it to capture future opportunities.
The Bank continued to adopt the strategy of utilising its FX SWAP book to fund rupee loan growth with focus placed on broad-basing counterparties to diversify risks. Gains on foreign exchange increased primarily from FX funding swaps due to the discounts which prevailed in the market. Nations Trust Bank successfully pursued low-cost funding options through the SWAP market, affording the Bank a strong platform to drive growth in 2022.
Credit cost management
Strategic focus on preserving portfolio quality through strong monitoring, risk profiling and ongoing customer engagement enabled the Bank to achieve an improvement in portfolio quality. Positive flows in the past due buckets together with lower exposures in most risk buckets, reflects a 228bps reduction in the non-performing loan ratio, thereby reducing impairment charges on loans by 13% during the period. The Bank continued to assess the uncertainties in the operating environment and to maintain a management overlay in the impairment provisions on exposures to identified risk elevated industries.
The Bank has also assessed the impact of macroeconomic variables that could elevate the credit risk of the loan portfolio and considered the potential impact of these variables in the calculation of provision for impairment.
The Bank further increased the impairment provisions against other financial instruments to reflect current market trends and other applicable macroeconomic conditions.
Nations Trust Bank invested LKR 334 million on digital capabilities during the year while automating over 40 internal processes which supported growth in omni-channel users and Digital transactions which reached 87%. The cost management culture entrenched across the organisation by continuation of some of the cost saving strategies and initiatives executed last year along with productivity, efficiency drives and focus on some large cost pools were the main reasons for the 2% reductions in expenses. Cost to income ratio improved to 39% compared to 46% in the previous year, demonstrating the Bank’s ability to considerably enhance efficiency and productivity through digitalisation and new ways of working.
The impact stemming from the tax rate differential in income tax and deferred tax relating to the previous financial year was reversed in the year ended 31st December 2021 using the applicable new tax rate of 24%. This resulted in a profit after tax growth of 65% over last year.
In the Budget Proposals 2022, the Government has proposed to impose a surcharge tax at the rate of 25%, on individuals or companies with a taxable income over Rs 2,000 million for the year of assessment 2020/2021. However, this proposal was not substantively enacted as at the date of the financial statements. As such, the Bank and the Group did not recognise any provision in 2021 financial statements in lieu of the proposed surcharge tax.
The Return on Equity stands at 18% with a 69% EPS growth for the period under review.
Strong Financial position
The financial position of the Group remained strong as its Tier I Capital and Total Capital Adequacy ratios as at 31st December 2021 were well above the regulatory levels at 14.77% and 17.46%, respectively. The Statutory Liquid Asset Ratio (SLAR) for the Domestic Banking Unit was at 33% as at the reporting date.
Essential banking services were provided continuously despite some parts of the country being isolated with prolonged travel restrictions over a few months being imposed as a result of a third wave of COVID-19 during the year.
In true spirit of supporting the national effort, Nations Trust Bank’s employees came together to contribute essential medical equipment for the National COVID-19 Response, by donating a half a day’s salary to the Bio Medical Engineering Unit at the Ministry of Health. Nations Trust Bank also donated a portable ventilator to the Colombo South Teaching Hospital, Kalubowila in early 2021.
Commenting on the results and achievements, Priyantha Talwatte, CEO/Director of Nations Trust Bank stated, “We are committed to pursue growth opportunities across selected industry sectors by offering holistic value propositions, which include advisory and capacity building across product verticals with ongoing focus on strengthening employee capabilities. We remain focused on delivering our strategic agenda set for the year and enhancing digital capabilities with the ultimate intention of achieving customer convenience, cost and process efficiencies, pioneering innovation and thereby, challenging the norm to deliver an unparalleled banking experience to our customers in a new reality. With the nation-wide vaccination program successfully being rolled out, there is an expectancy of a rapid return to economic normalcy, and Nations Trust Bank is fully geared to steer ahead more responsively to the external environment by prioritizing customer requirements supported by an extremely focused and involved Nations team who has demonstrated their agility to deliver sustainable value, given the challenging environment.”
Wing Commander (Retd.) D. Pradeep S. Kannangara elected president, Industrial Security Foundation
The Industrial Security Foundation (ISF) which acts as the sole organization in Sri Lanka to represent the Private Security industry having incorporated by an Act passed in the Parliament, Act No. 51 of 1999, elected Wing Commander (Retd.) Pradeep Kannangara as its President for the years 2022/2023 at its 30th annual General Meeting which was held at the PIM Auditorium in Borella. Wing Commander Pradeep Kannangara was appointed President while 14 other members were appointed to the Executive Committee, strengthening the ISF in order to drive and uplift the standards of the private security industry in Sri Lanka.
He has served on the ExCo consecutively since 2012 under four different presidents where he held the positions of Senior Vice President during the last three consecutive years. He has also been a committed member of the ISF and was awarded prestigious coveted FISF title due to his many valuable contributions to the organization and the Private Security Industry in Sri Lanka in 2012.
Wing Commander Kannangara’s journey into private security began after a successful career in the Sri Lanka Air Force for over 24 years where he served in many capacities finally being the Officer Commanding of the Special Air Borne Force. A recipient of the Ranasura Padakkama (RSP) Gallantry award for his bravery, sacrifices and service to the nation by the President of the Socialist Republic of Sri Lanka in 1990. He holds a Master’s in business management from the Edith Cowan University, Perth, Australia too and serves as a Board Director in AB Securitas (Private) Limited in Sri Lanka and AB Securitas Bangladesh Limited.
Kitchen & Bedroom reaffirms its partnership with Häfele Sri Lanka
Kitchen & Bedroom, a name synonymous in the interior designing and furniture sector in the country recently celebrated its long-standing partnership with Häfele Sri Lanka during the latter’s 12th year anniversary celebratory event, reaffirming its ambitious plans to further strengthen and explore the numerous opportunities available here.
Häfele Sri Lanka, part of Häfele India which is a wholly owned subsidiary of the Hafele Global network, is a technology partner for various projects and initiatives of Kitchen & Bedroom. Both the companies operate in the interior design space, sharing their cumulative knowledge and expertise to provide extensive and personalized solutions catering to domestic requirements.
‘We take great pride in our association with Häfele Sri Lanka having exchanged and collaborated on many projects both commercial and household. We share similar values such as providing high quality, sustainable, functional and customized solutions to our customers, and most importantly to guide them through every aspect and step of the project and how best we could bring out their desired design,’ said Dr. Sacquaff, Kitchen & Bedroom Group CEO.
DSI strengthens its islandwide presence with three new showrooms
Amid the prevailing economic hardships faced by Sri Lanka, Sri Lanka’s premier footwear brand DSI recently expanded its islandwide presence in the country with the opening of three new showrooms in Kahawatta, Akuressa, and Chavakachcheri, with the aim of offering greater access to its diversified product range to a wider customer base.
Gracing the special occasion, the showrooms were declared open by D. Samson & Sons (Pvt.) Ltd. Managing Director Thusitha Rajapaksa, in the presence of Director Asanka Rajapaksa, General Manager Pradeep Samarathunga, National Sales Manager – Retail Sales Naleen Weerawardana, invitees, and well-wishers.
Speaking at the opening ceremony, Thusitha Rajapaksa stated: “We are excited about expanding DSI wings to three new locations. Despite the ongoing economic conditions of the country, we took a call to take a proactive measure to expand our islandwide presence. While it has been a challenge, the commitment and hard work of our team has made it possible to serve our loyal customers better, and we are confident that we will be able to continue these efforts in the future as well.”
DSI is renowned for its well-trained staff who offer exceptional customer service. The three new DSI showrooms prioritize providing a unique service and customer support to make purchasing further convenient for the customer.
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