National Bank of Pakistans deposits grew by Rs133 billion during CY14. The advances grew by a mere Rs 10billion and the investments by Rs165 billion. Little wonder that the ADR which used to be in the 60s is just holding to 50. And you would not blame NBP for being invested heavily in PIBs, as that is what CY14 was all about.
As yields slow down on government papers, banks are focussing on improving their deposit mix. This is where NBP lags well behind its peers, as its CASA is way below the peer average, and especially in these times of thin spreads. That said the gross spread ratio still managed to be intact, holding up the net mark-up income.
Being state owned comes with its perils and the infectious loan book is what NBP has carried for quite some time. The NPLs continue to persist and are quite high at 19 percent. In an effort to provide more adequately, provisioning charges ballooned during the quarter, nearly trebling, taking the post provisioning net mark-up income down.
Thanks to the treasury arm which continuously keeps churning huge returns for the bank. The gain on sale of securities was the major contributor towards non mark-up income, which kept the bottom line from suffering the provisioning charges blow. The administrative costs for once, were kept in check by NBPs standards.
As interest rates slow down, the private sector lending opportunity presents itself. NBP has not exactly been a lazy banker, but lower yields on government papers will mean an added focus on lending. And this is where the challenge lies for NBP, as the infection ratio is on the higher side. In times of thin spreads, prudence will play a keep role. And NBP would do well to either restrict the NPLs or improve the CASA, or both.
============================================================
National Bank of Pakistan (Consolidated P&L)
============================================================
Rs (mn) 1QCY15 1QCY14 chg
============================================================
Markup Earned 30,081 26,253 15%
Markup Expensed 18,672 16,479 13%
Net Markup Income 11,409 9,774 17%
Provisioning/(Reversal) 3,108 984 216%
Net Markup Income after provisions 8,301 8,790 -6%
Non Mark-up/Interest Income 8,593 6,115 41%
Operating Revenues 16,894 14,905 13%
Non Mark-up/Interest Expenses 11,242 9,912 13%
Profit before Taxation 5,652 4,994 13%
Taxation 1,762 1,266 39%
Profit after Taxation 3,890 3,728 4%
EPS (Rs) 1.83 1.75
============================================================
Source: KSE Notice
Comments
Comments are closed.