The Group achieved a Profit Before Tax of Rs. 10.4 billion, for the twelve months ended December 31, 2021 – a growth of 38% compared to the previous year. 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%.
The improvement in the CASA ratio to 40% at end of the year, from 32% recorded in the previous year, helped partially offset the decline in interest margins during the period.
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%. 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 further increased the impairment provisions against other financial instruments to reflect current market trends and other applicable macroeconomic conditions.
Nations Trust Bank invested Rs. 334 million on digital abilities 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 December 31, 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 ofthe proposed surcharge tax.
The financial position of the Group remained strong as its Tier I Capital and Total Capital Adequacy ratios as at December 31, 2021 were well above the regulatory levels at 14.77% and 17.46%. The Statutory Liquid Asset Ratio (SLAR) for the Domestic Banking Unit was at 33% as at the reporting date.