NTB’s operating profit down but gains in post-tax profit for 1Q2020
View(s):The Nations Trust Bank Group’s operating profit before taxes fell by 7 per cent in the first quarter of 2020 due to a multitude of reasons including the impact from the COVID-19 pandemic but post-tax profit increased by 24 per cent due to withdrawal of the Debt Repayment Levy and NBT on financial services, the bank said on Tuesday in announcing its 1Q2020 results..
Interest income declined by 8 per cent due to the lack of growth in the loan book and interest ceiling imposed from April 2019. While lending, credit cards, trade and deposit related fees recorded a drop owing to lower business volumes, net forex gains increased during the period increasing the total net revenue to 2 per cent.
When assessing the impairment provisions, the bank said it considered the potential impact of the COVID-19 pandemic on customers as well as the relief package introduced in the form of a debt moratorium by the government. Additional impairment provisions were made for identified customer segments impacted due to COVID-19 related developments, by assessing potential delays to the cash flow expectations based on currently available information, leading to a 46 per cent increase in the impairment charge.
Looking forward, the bank said a shortfall in revenue is expected against the targets set as a result of the debt moratorium, interest rate ceilings and also due to sluggish credit growth. The bank is in the process of gathering applications for the debt moratorium by customers and the eligible applications are still being reviewed. “As a result, the impact on the bank’s future earnings cannot be reasonably estimated at the present moment. At the same time, the bank will cautiously explore new business opportunities that may present from time to time. The bank has also launched a number of initiatives to curtail expenses to minimise impact to profitability in line with the prevailing business environment,” the statement said. Supported by a strong capital base, healthy liquidity buffers and with robust risk management models, the bank said it was confident that it has the required resources to withstand the potential impacts arising from this crisis as currently foreseen.