How Nations Trust Bank re-adjusted its strategy before the pandemic hit

Priyantha Talwatte received his appointment of CEO of Nations’s Trust Bank just weeks after the country’s first lockdown. He eased into his role primarily because of an organization-wide transition that started in 2019. From realigning teams to recalibrating strategy to digitalisation, the bank emerged stronger than ever before.

COVID-19 and the lockdowns took everyone by surprise, but this listed bank found it easier than most to adapt.

Priyantha Talwatte received his appointment of CEO of Nations Trust
Bank just weeks after the country’s first lockdown. He eased into his
role primarily because of an organization-wide transition that started in
2019. From realigning teams to recalibrating strategy to digitalisation,
the bank emerged stronger than ever before.

What was the impact of COVID-19 on Nations Trust’s operations and performance?

The 2019 Easter attacks compelled us to re-look at our strategic plan. The credit market had deteriorated, and we had to review our organisational and operational structures, rationalise costs, and identify strategies for growth. So, unwittingly, we had prepared the bank for the challenges when the pandemic hit.

Our strategy now includes establishing the corporate and trade finance pillars for more balanced growth.

At the end of 2019, we monitored the coronavirus outbreak and its global spread, forecasting various outcomes. Our economy did well during the first few months of 2020 — October 2019 saw economic activity pick up amidst some stability after the Presidential election. But around February and March, tourism felt the strains of global travel restrictions. Then Sri Lanka went into an unexpected lockdown for nearly two months. By then, we had already adjusted our organisational, process and cost structures, and optimised our supply and value chains. Our digitalisation drive hit a critical mass. Over 80% of our banking transactions are digital, so there was no real interruption to banking. All our customer contact points remained open under stringent health and safety protocols, operating 24×7 services throughout the period. We looked at global best practices around health, safety, and crisis management to ensure our customers had uninterrupted access to banking services. We have a sizable client-base that’s global and on the move, so we reached out to them to ask how we could help. Many of them were overseas or in transit, and we did all we could to facilitate their return and support their fund transfers. We acquired essential groceries and delivered them to customers who could place their orders online. We also started door-to-door cash delivery services and launched mobile ATMs. These placed us in a strong position to meet the COVID19 challenges head-on with confidence.

How is Nations Trust Bank containing risks?

We took measures early on to meet the expected economic crunch, although, at the time (and even now), no one has a clear idea about the pandemic’s full impact. We mobilised deposits, and, as a result, built excess deposit liabilities which benefited us. Now we have excess liquidity in our reserves. With the debt moratoriums, the bank disbursed more than Rs1.8 billion in working capital loans to small businesses under the Central Bank’s laudable refinance scheme. NTB had an allocation of Rs1.6 billion for disbursement, but we worked hard to ensure as many as possible received the benefit. Although credit growth had halted, and tightening margins impacted the bank’s financial performance, our strategy shift was helpful. During the first nine months of 2020, topline revenue declined 11% from a year earlier to Rs31 billion, while operating profits declined a marginal 3% to Rs5.9 billion. After-tax profits increased by 22% to Rs3.1 billion because of some tax cuts announced by the government.

How has NTB’s brand positioning changed over the years?

Several years ago, NTB was mostly in retail and SME banking. The bank grew its presence outside the Western Province and actively pursued an SME loan book expansion. Previously, the bank only focused on the Western Province, where most of the wealth and business activity concentrated. Our strategy now includes establishing the corporate and trade finance pillars for more balanced growth. Retail banking will continue to be a growth catalyst. We have a network of 97 branches, optimal for business growth without the need to invest in expansion. These branches cover the top 100 cities and townships in the country. We have the largest market share for credit cards at 22%, which is an enviable position — it includes an extensive merchant network built over two decades. We enjoy the synergies of being a part of the John Keells Holdings group and were one of the first banks to venture into supermarket banking. Revenue and profitability have more than doubled over the last two years in corporate banking. We’re helping our corporate clients address cash flow problems and launched the Nations Direct Commercial Payments, a cash management solution. The bank is also pursuing opportunities in offshore structured financing to help local corporates expand overseas. It will unlock opportunities to cross-sell our suite of personal and digital banking products and services. During the 2019/20 financial year, our customer base for e-wallet and digital fund transfer platform, FriMi, nearly doubled. And monthly transactions values reached Rs4 billion, while its merchant base increased to 3,500. FriMi will revolutionise Sri Lanka’s payment landscape, allowing fund transfers and purchases via a mobile number or QR code. We have combined online banking, mobile payments and e-wallets into a single platform. FriMi accounts for a significant market share in Sri Lanka’s national online transactions platform, JustPay. We will continue to innovate and be a defining force in Sri Lanka’s payments ecosystem.