Releasing the interim financials to the Colombo Stock Exchange, Nations Trust Bank PLC announced that the Bank and its fully owned subsidiaries maintained the growth momentum recorded in 2007 during the first quarter 2008 by posting a Profit after Tax of Rs. 144.208 Mn. compared to that reported for the corresponding period in 2007 of Rs. 102.031 Mn., an increase of 41%. This corresponds to a growth in net income of 36% with only a growth of 24% in operating expenses (excluding provisions). Total assets grew by 11% during the quarter.

The growth in net income was facilitated by improvements in net interest income (39%), foreign exchange income (29%) and other operating income (32%). Timely re-pricing of assets and liabilities, replacing part of the high cost funds with relatively low cost sources of funds and increasing money market based lending helped the Bank in achieving the net interest income. Increased trade and foreign exchange volumes and active market participation contributed to the excellent performance in foreign exchange income. The Credit Card business and Other Operating Income too recorded significant improvements during the period.

Customer Deposit however, recorded only a marginal growth due to the Bank letting some high cost deposits go during the quarter. Deposit mobilization continued to be a challenge in the backdrop of relatively high interest rates on gilt-edged securities, intense competition and wide gap in interest rates between low yielding and high yielding deposit products leading to an unfavourable shift in deposits from low cost to high cost.

Increase in operating expenses of 24% was in line with the increased business volumes and inflationary pressures. Reflecting the difficult economic conditions that prevailed during the quarter, the specific provisions for bad debts increased during the quarter to Rs. 96 Mn. against Rs. 39 Mn. in 2007 and the Non-performing Advances Ratio deteriorated marginally. Necessary precautions have been taken to maintain the quality of the assets portfolio.

Zulfiqar Zavahir, Director/Chief Executive Officer of Nations Trust Bank PLC said, "We are delighted that the Bank is progressing remarkably well in line with our projections. We are extremely focused on implementing our strategy which has taken into account the prevailing economic conditions and are confident that the successful implementation of the strategy will undoubtedly further strengthen our position in the Sri Lankan banking industry and will have a major impact on our performance going forward."

In September last year, Fitch Ratings Lanka Ltd. reaffirmed the rating assigned to the Bank of A(lka) which denotes a strong credit risk relative to other issuers or issues in the country.

A rights issue of shares and the purchase of the Head Office building were two important highlights of the quarter. Manifesting the shareholder support for the growth plans, the Bank in February 2008 successfully concluded the rights issue of shares infusing Rs. 1.048 Bn. to the Tier I capital of the Bank, as the first tranche of the innovative capital augmentation plan announced in December 2007. The capital plan is expected to infuse approximately a further Rs. 2.000 Bn. to the Bank by way of equity over the next three years. This improved the total Capital Adequacy Ratio of the Bank to 12.69%. In January 2008, the Bank purchased the Head Office building at No. 242, Union Place, Colombo 2.