NTB shares soar, CEO says HSBC deal underlines global shifts, local ascent

NATIONS Trust Bank PLC (NTB) shares closed up 22.72% yesterday, up Rs. 72.25 to Rs. 390.25, following Wednesday's announcement of the bank's proposed Rs. 18 billion acquisition of Hongkong and Shanghai Banking Corporation's (HSBC) Sri Lanka retail banking business, which marks one of the largest portfolio transfers in recent years and reflects the broader retreat of global banks from consumer segments in Asia.

- DEVAN DANIEL

NTB Director and Chief Executive Officer Hemantha D. Gunetilleke yesterday told the Daily FT that the Rs. 18 billion acquisition of HSBC's Sri Lanka retail banking business reflects a wider shift in global finance as multinational banks scale back. He argued local institutions that invest in technology and people are now better positioned to unlock value for shareholders, while offering more relevant services to customers.

For NTB, the acquisition is both a growth catalyst and a test of execution, bringing with it around 200,000 customers, seven branches, and a large credit card and Premier banking franchise.

For investors, customers, and policymakers, it signals that Sri Lanka's local banks are positioned to absorb scale, protect client service, and maintain earnings momentum. The Rs. 18 billion price tag, with taxes applicable on top, was set on forward profitability models. While book values remain confidential, Gunetilleke said the portfolio is value positive. NTB had built up a capital "war chest" to act on such opportunities, and though this deal will draw on reserves, capital ratios will remain strong.

For shareholders, the bank expects the acquisition to be earnings accretive. Return on equity (ROE), which recently exceeded 20%, is forecast to normalise mostly due to market interest rates impacting net interest margins (NIMS), still maintaining a six-point premium to the industry average with one of the best NIMS in the industry, Gunetilleke said.

The market has already signalled confidence, with NTB's share price reacting positively to the announcement. From a business perspective, the acquisition strengthens NTB's positioning in profitable niches. The transfer of HSBC's credit card base will give NTB a significant market share.