The Group recorded record profits before tax in the amount of LKR 10.4 billion in the twelve months ending 31 ^December December 2021. This is an increase of 38% over the previous year, despite a difficult operating environment that was experienced throughout the time. The Group had a profit after tax of 65%, which was aided by the reduction of the tax rates for corporates.

Business Growth

The Loan book saw an increase of 18% over the year compared to private sector’s credit growth of 13.5 percent.

Nations Trust Bank adopted a targeted expansion strategy, seeking growth opportunities in areas like exports, local manufacturing that are linked with the national development agenda and registering growth in agricultural and renewable energy sectors. The Bank focused on helping customers navigate the economic crisis, actively engaging them and offering customized financing solutions to ensure their commercial viability. The Bank has also increased one-to one engagement with its customers, providing personal plans for repayment , and offering advice on how to manage cashflows effectively.

The Bank provided its fullest assistance in the implementation of initiatives of the Government to reduce the negative impact of COVID-19 communities and businesses as well as to help stabilize the economy through taking part in the ‘Saubhagya’ lending scheme. Over LKR 20 billion of new credit facilities were dispensed by the Bank under its own revitalization funds “Nations Diriya” scheme, which is designed to provide financial assistance to the key industries which will allow companies to restart and restart their operations.

The Consumer Banking Division adopted a loan model that is based on a lifecycle that focuses on an emphasis on product and instead offering appropriate, customer-focused solutions in response to specific requirements. The Bank increased its digital offering to customers by launching Nations Direct, a Nations Direct integrated cash management system that is geared towards commercial and corporate customers. It also offered custom-designed offerings and host-to-host services in addition to host-to-host options.

Nations Trust Bank raised USD 65 million from foreign Development Finance Institutions during the year to help its Small and Medium Enterprise (SME) sector, which demonstrates the stability and track record that Nations Trust Bank Bank despite the uncertain market. The Bank also has raised LKR 4 billion Fitch ‘A’-rated Senior, Unsecured, Redeemable Debentures with no listing in July 2021, further enhancing the funding profile for the medium term that is offered by the Bank.

Growth in revenue

In support of loan growth and economic recovery efforts the average yield on loans decreased by 260bps over the course of the year. A net decrease in yields within the FIS portfolio was also a factor in the reduction in interest income. The absence of an one-time interest reverse on loans with moratoriums similar to that which was observed in the prior year contributed to the reduction in interest income. The rise on the CASA ratio, which was at 40% at the close this year up from 32% in last year’s report, was able to somewhat offset the decrease in the margins of interest during the course of.

It is evident that the momentum has been evident as evidenced Trade Finance related income with the growth in specific Trade Finance related activities. The growth in card income was limited by an increase in the amount of money spent on cards because of changes in customer behaviours due to restrictions on mobility and foreign travel in specific times during the course of. The suspension or reimbursement of some costs by the Bank due to the present difficulties facing customers as a result of the COVID-19 pandemic affected the Bank’s fee-based earnings. Although the pandemic’s effects impacted spending on credit cards during certain months, the overall performance was bolstered due to the release of accumulated demand during other times.

Since the yield curve remained flat for the majority through the calendar year the opportunities for capital gains from trading were insufficient. The Bank was conscious of the need to cut down the length of the portfolioby repositioning it to take advantage of the future opportunities.

The Bank continued to implement the policy of using their FX SWAP account to finance the growth of loans in rupees with a focus on broad-based counterparties in order to diversify risk. Foreign exchange gains increased in the first place due to FX funding swaps because of discounts that were prevalent on the market. Nations Trust Bank successfully pursued financing options that were low-cost through SWAP, a SWAP market, which gave the Bank an excellent platform for growth in 2022.

Management of credit costs

The strategic approach to preserving the quality of portfolios through a rigorous monitoring of risk profile and continuous customer interaction allowed the Bank to see an improvement in the quality of its portfolio. Positive flows over the last due buckets, along with lower exposures in the majority of risk buckets, reflect an improvement of 228bps in the ratio of non-performing loans and a reduction in the amount of loan impairment charges by 13% over the time. It was noted that the Bank continued to analyze the risks regarding the operating environment and to keep an overlay of management in the impairment provisions for risks to the identified risk-adjusted industries.

The Bank has also evaluated the effect of macroeconomic variables that may increase the risk of credit for the portfolio of loans and assessed the impact that could be a result of these variables on the calculation of provisions for impairment.

The Bank has also increased the impairment provisions for other financial instruments in order to reflect the current market conditions and other macroeconomic circumstances that may be relevant.

Excellence in operation

Nations Trust Bank invested LKR 334 million for digital capabilities over the course of the year. It also automated more than 40 internal processes that helped an increase in the number of users who use omnichannel channels and digital transactions that were 87 percent. The cost management philosophy is embedded throughout the organization through the continued implementation of several cost-saving strategies and initiatives implemented in the past year, along with increased efficiency, productivity and concentration on huge cost pool were among the major factors behind the reduction of 2% in expenditure. Cost-to-income ratio increased by 39% from 46% during the previous year. This is a sign of that the Bank is able to increase efficiency and efficiency through the digital revolution and new methods of working.

Taxation

The negative impact of taxes differentials taxes on income and deferred taxes in relation to the previous fiscal year was reversed the year ending 31 ^on December 2021, using the new tax rate of 24 percent. The result was an increase in profits after tax of 65% over the previous year.

The Budget Proposals 2022, the government has suggested imposing surcharge taxes at a rate of 25% on businesses or individuals with net taxable income exceeding 2 million rupees in the year of assessment 2020/2021. The proposal, however, was not actually implemented as at the time publication of financial reports. This is why it is the case that the Bank and the Group did not consider any provision in 2021’s financial statements to take the place of the tax proposed to be imposed on surcharges.

Profitability

Its Return on Equity is at 18%, with an increase in EPS of 69% during the review period.

Strong Financial position

The financial standing of the Group was strong, as it’s Tier I Capital and Total Capital Adequacy ratios as of 31 ^day the month of December in 2021 was above the norms of 14.77 percent and 17.46 percent respectively. Its Statutory Liquid asset ratio (SLAR) of the Domestic Banking Unit was at 33% at time of the report.

Operations

Banking services were available continuously, despite certain areas that were deemed to be isolated and a long-term travel ban for the course of a few months due to the COVID-19 third wave throughout the course of.

In the spirit of supporting the efforts of the entire nation Nations Trust Bank’s staff have come together to donate vital medical equipment to the COVID-19 National Response by donating a half day’s pay for the Bio Medical Engineering Unit within the Ministry of Health. Nations Trust Bank also donated an air-conditioner portable to Colombo South Teaching Hospital. Colombo South Teaching Hospital, Kalubowila at the beginning of 2021.

Steps forward

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 are determined to fulfill our plan of action for this year and further enhancing digital capabilities with the goal of achieving convenience for customers efficiency, cost reduction and process efficiency by introducing new technologies and, in the process changing the status quo to offer a truly exceptional customer experience in a world that is changing. With the nationwide vaccination program having been successfully completed it is expected of a swift return to normal economic conditions which is why Nations Trust Bank will be well-equipped to be more in line with the changing external conditions by prioritizing customer needs, backed by a highly committed and active Nations team that has shown their flexibility to provide sustainable value in the current circumstances.”