The National Bank of Pakistan''s profit before tax recorded an improvement of 47 percent in the third quarter ended September 30 on the back of sustained growth in advances and rise in Net Interest Income (NII) for NBP as well. The profit before tax of the bank during this period amounted to Rs 3.034 billion as compared with Rs 2.008 billion of the same period a year ago. The net profit of the bank rose to Rs 2.012 billion as against Rs 1.364 billion of the same period a year ago.
The earning per share improved to 4.09 rupees a share from 2.77 rupees a share, the bank said in a statement to Karachi Stock Exchange on Monday.
NBP''s 9M-FY04 earning base was mainly boosted by record dividend income from NIT unit holding. The bank''s nine months earnings totalled Rs 4.201 billion as against Rs 3.293 billion of the same period corresponding year while earnings per share amounted to 8.53 rupees per share as against 6.69 rupees a year earlier.
Despite the NPL drag and high administrative cost, spreads of the public sector banks have registered an improvement, which now range between 3 percent and 4 percent as cost of deposits are still very low (average rate in 1H-FY04: 1.51 percent), said Faisal Shaji, research analyst from Capital One Equities.
NBP is one of the major beneficiaries of the NIT dividend payout (Rs 2.55 per certificate).
The bank is expected to book staggering after tax gain of Rs 890 million, which gives an upside of at least Rs 1.8 per share and transcend 9M-FY04 bottom line. NBP maintains a gainful holding of 368 million units.
Banking industry has witnessed a quantum of asset-led growth in the ongoing fiscal year, as the whole emphasis of locking funds in government securities has shifted towards disbursements of loans, owing to rise in interest rates.
Shaji said that the downward swing in the prices of government securities had yielded capital losses for many banks, which also eroded their book values.
However, with the reclassification of loss making bond portfolio under ''held to maturity'', the banks are expected to regain their Tier-3 capital and hence resurrect battered book values.
"We believe that NBP would also be one of the main gainers as it had previously put a major portion of bond holding under ''available for sale'' category.
However, now it would be able to hide loss making portfolio by placing it under ''held to maturity'' category. "We believe that NBP is in a position to take advantage of huge credit demand emanating from various sectors of the economy. Apart from tapping the SME segment, corporate loan book size of the bank is all set to increase, as large scale manufacturing (LSM) is expected to expand by 10 percent in the country," he said.
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