The net profit of National Bank of Pakistan (NBP) would range from Rs 4 billion to Rs 4.28 billion because of growth in economy, increase in its net interest margin following the rise in lending to the private sector. The Board meeting of National Bank of Pakistan (NBP) would be held on Monday, October 25, 2004.
Mohammad Faisal Potrik, head of research at First Capital Equities, said he expected NBP to post a profit after tax (PAT) of Rs 1.8 billion (EPS Rs 3.70) for the third quarter of 2004 as against Rs 1.4 billion (EPS PRs2.77) of corresponding period of last year. This would take the nine-month PAT to just over Rs 4 billion (EPS Rs 8.15) as against an EPS of Rs 6.69 for the first nine months of FY03.
"We expect the Net Interest Income to grow by 24 percent to Rs 3.27 billion on the back of rising advances as private sector credit has grown by Rs 64.5 billion for the period July-September 2004, coupled with rising yields on government securities," he said.
The NBP would reverse its policy of reducing investments as government securities become attractive. The non-interest income is expected to grow 20 percent on the back of higher NIT dividend, but the growth would be subdued largely because NBP had made capital gains of Rs 900 million in 3QCY03.
The effective tax rate would be higher as proportion of capital gains would be lower in 3QCY04.
NIT had declared a record dividend of Rs 2.55 per share for the year FY04 as against Rs 1.75 in FY03. "In line with traditions, we expect NBP to show dividend in its third quarter accounts."
National Bank holds 360 million units of NIT (including the units inherited with its take-over of the defunct NDFC), which would give it a total dividend of Rs 918 million or Rs 1.80 per share pre-tax.
"We expect the NIT dividend to propel non-interest income to Rs 2.4 billion for the third quarter," he said.
Khalid Iqbal Siddiqui, research analyst at Investcapital Securities, expects that NBP would post an after-tax profit of Rs 4,250-4,280 million (EPS Rs8.6-8.7) for January-September 2004, compared to Rs 3,296 million (EPS Rs6.7) of January-September 2003 showing a year on year increase of 30 percent.
The 30 percent growth in profits would be due to higher dividend from NIT along with a huge growth in advances that NBP, along with the rest of the banking sector, is experiencing.
NBP realises its NIT dividend in the third quarter, which will pull up total income by around Rs 930 million (before tax) for the period.
Apart from NIT dividend income, Net interest income (NII) is also expected to rise by 3 percent from Rs 8,789 million to Rs 9,008-9,015 million. The low growth in NII is due to the decline in NII in 2Q2004.
In 3Q2004 alone, NII is expected to grow by 15 percent over 3Q2003''s NII of Rs 2,637 million.
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