Total revenue grew 16 percent year on year (YoY) to 224bn/- from 193bn/- recorded in Q1 2020. The revenue growth was driven by increase in net interest income due to increase in both loans and advances, along with investment in government securities. The bank recorded 10percent YoY growth in non-funded income from increased customer activities on the bank’s digital platforms, the statement said.
“The bank continues to demonstrate enhanced operational efficiency,” the review noted, elaborating that the execution of cost-optimization initiatives continues to yield positive results, with cost-to-income ratio improving to 48 per cent in Q1 2021 from 52 per cent in Q1 2020, well below the regulatory threshold of 55 per cent. The bank will continue to implement cost-optimization and operational efficiency initiatives in line with its strategic ambitions and enhancing customer service, it said.
Asset quality has markedly improved due to continued focus on better quality credit origination, robust portfolio risk management and recovery efforts. “This has resulted into containment of impairment charge with marginal increase of five percent YoY and improved non-performing loans (NPL) ratio to five per cent (within the regulatory threshold) from 6.9 per cent in the previous year.”
It affirmed that the bank’s balance sheet remains strong, “reflecting continued focus on deepened penetration,” noting that the bank’s loans and advances grew 11 per cent YoY, while the “delivery of distinctive customer-focused value propositions” facilitated a nine percent YoY growth in customer deposits to 5.3trn/- in Q1 2021from 4.8trillion/- in Q1 2020.
“We continue to place emphasis on maintaining a healthy funding base to support sustainable lending growth as we approach H2 2021,” the statement specified, elaborating that during the period, the capital position strengthened with Tier I capital ratio of 19.6 per cent, up from 17.8% in Q1 2020.
Total capital ratio stood at 20.4 per cent, up from 18.5 per cent in Q1 2020, both being well above regulatory requirement, it stated.
Commenting on the bank’s solid performance, CEO Ruth Zaipuna said the bank had a promising start to the year as it continues to deliver consistently to shareholders and communities. The bank’s revenue continues to grow due to enhanced customer value propositions and a firm grip on cost and risk. “The encouraging performance in Q1 2021 reflects the good progress along our strategic initiatives and underlines our strong capabilities and commitment to remaining relevant to our customers,” she stated.
The bank’s capital position remains strong and provides sufficient headroom to support bold growth ambitions. With the firm foundations that are in place and an improved global economic outlook, increased confidence in growth plans is visible, to carry the good momentum into the second quarter. “We remain focused on our key strategic pillars and aim to continue delivering the best-in-class service and experience for our customers and stakeholders, whilst continuing to operate as an agile and efficient bank.”
The solid performance reflects continued revenue growth momentum, disciplined cost-optimization, and enhanced loan portfolio management, the director added.