National Bank of Pakistan (NBP) was established under the National Bank of Pakistan Ordinance, 1949 and is listed on all the stock exchanges in Pakistan. NBP is engaged in providing commercial banking and related services in Pakistan and overseas. It also handles treasury transactions for the Government of Pakistan as an agent to the State Bank of Pakistan.
In addition, under a Trust Deed, the bank provides services as trustee to National Investment Trust including safe-custody of securities on behalf of NIT. NBP operates 1,217 (2004: 1,208 branches in Pakistan and 18 (2004:18) overseas branches (including the Export Processing Zone branch, Karachi).
NBP shares are largely held by the State Bank of Pakistan/GOP while some shares have been offered to general public as well.
Consequent upon NDFC amalgamation, NBP manages on behalf of GOP, Long Term Credit Fund (LTCF) established from the proceeds of the loans disbursed by various international funding agencies for financing private sector energy development projects.
LTCF assets are accounted for separately from those of NBP and amounted to Rs 45 billion on December 31, 2004.
NBP has the wholly-owned subsidiaries: (i) NBP Capital Limited; (ii) CJSC, Subsidiary Bank of NBP in Kazakhstan; (iii) NBP Exchange Company Limited; (iv) NBP Modaraba Management Company Limited; and (v) National Agriculture & Storage Company Limited. NBP has two other subsidiaries, Taurus Securities Limited and Cast-N-Link Products Limited, the ownership interest is 58% and 77% respectively. NBP accounts for its investment in subsidiaries, associates and joint ventures at cost less impairment, if any.
NBP considers that the effect of consolidation of subsidiaries' financial statements will not have any material impact on bank's financial position or results and accordingly consolidated financial statements have not been prepared. The SECP has granted an exemption to the bank under sub-section (8) of section 237 of the Companies Ordinance, 1984.
Total assets of NBP increased by 5% during the six months ended June 30, 2005 to Rs 579 billion as compared to Rs 550 billion on December 31, 2004. Net Investments on June 30, 2005 increased by 1% to Rs 145 billion (25% of total assets) comprising Available for Sale 69 %, Held to Maturity 29% and Subsidiaries and Joint Ventures 2%.
As on June 30, 2005, Advances- (net) rose to Rs 251 billion (43% of total assets) compared to Rs 221 billion (40% of TA) as on December 31, 2004. On June 30, 2005, as a proportion of Advances (gross), Loans and Cash Credits comprised 96% local and 10% overseas; Bills payable 1% locally and 4% abroad, and the rest were Provision for Loan Losses. NPLs at end June 30, 2005 were 13% of Advances as against 14 % of Advances at the end of 2004.
However, NBP has made full provision against bad loans as per the requirements of the SBP. The increase in Total Assets was financed largely through 5% increase in Deposits and 11% increase in Total Equity to Rs 47 billion (8% of TA) as on June 30, 2005. The Deposits at end 2004 standing at Rs 466 billion rose to Rs 491 billion (85% of TA) as on June 30, 2005.
The notes to the financial statements for the six months ended June 30, 2005 state that NBP has changed its accounting policy in respect of accounting for investment in subsidiaries and jointly controlled entities from equity method of accounting to the cost basis as required by the revised IAS 31 "Interest in Joint Ventures" and IAS-27 "Consolidated and Separate Financial Statements" effective for financial periods beginning on or after January 01, 2005.
NBP earned after tax profit of Rs 7.048 billion for the six months ended June 30, 2005 as against Rs 4.027 billion for the corresponding six months of last year. The net mark up income increased by 33 % to Rs 9.873 billion (70% of total mark up income) as compared to Rs 6.012 billion (65% of total mark up income) for the corresponding six months of last year.
Total mark up-interest expense represented 30 % of total mark up income for the current six months as compared to 35 % of total mark up income for the corresponding six months last year. This shows that the small depositors were further squeezed during the period under review. Fee income also saw 12 % increase.
All these factors contributed toward larger profitability. NBP closed the six months on June 30, 2005 with After Tax Profit of Rs 4.394 billion (31% of total mark up income) as compared to Rs 2.180 billion (24% of mark up income) for the corresponding six months last year. ROE on six-monthly basis rose to 9.3% as against 5.1% for the corresponding period last year. Performance statistics are given below.
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Performance Statistics (Rs million) (Audited)
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Balance Sheet (Un-audited) On December 31,
As on June 30 2005 2004
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Total Assets: 578,677 549,535
Cash, balances with banks: 135,669 144,231
Lending to financial institutions: 16,862 10,511
Investments-Net: 145,491 144,378
Advances-Net: 250,861 221,444
Borrowing from fin. Institutions: 7,078 11,085
Deposits, other accounts: 491,137 465,571
Total Liabilities: 531,353 506,956
Share Capital: 5,909 4,924
Reserves, Retained earnings: 23,217 19,976
Surplus on Revaluation of Assets: 18,198 17,679
Total Equity: 47,324 42,579
Subordinated Loan: 0 0
Equity and Sub. Loans: 47,324 42,579
NPLs at end of period: 35,476 36,099
Contingencies and Commitments: 185,590 148,542
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Ratios:
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Cash and bank/Total Assets: 23% 26%
Investments/Total Assets: 25% 26%
Advance/Total Assets: 43% 40%
NPLs/Advances-Gross: 13% 14%
NPLs/Total Equity: 75% 85%
Provision required/Advances-G: 10% 11%
NPLs Prov. Req./Provision Held: 105% 102%
Deposits/Total Assets: 85% 85%
Total Liabilities/Total Assets: 92% 92%
Total Equity/Total Assets: 8.2% 7.7%
Equity and S. Loans/Total Assets: 8.2% 7.7%
Deposits/(Equity+S.Loans)-X: 10.4 10.9
Advances/Deposits: 51% 48%
Investments/Deposits: 30% 31%
Contin.& Comm./(Equity+SL)-X: 3.92 3.49
Book Value Per Share: 80.09 86.47
Quoted Price (31-8-05) - Rs: 119.00 -
Price/Book Value Ratio: 1.49 -
Income State. (HY end June 30) 2005 2004
Markup/interest earned: 14,145 9,234
Markup/interest expensed: 4,272 3,222
Net Markup/interest income: 9,873 6,012
Total non-markup income: 3,708 3,320
Admin expenses: 5,288 4,475
Profit Before Taxation: 7,048 4,027
Profit after taxation: 4,394 2,180
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Ratios: (Half Yearly Basis)
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Net Markup Income/Total Assets: 1.7% 1.1%
Non-Markup Income/Total Assets: 0.6% 0.6%
Admin expenses/Total Assets: 0.9% 0.8%
Profit before Taxation/Total Asset 1.2% 0.7%
Profit after taxation/Total Assets 0.8% 0.4%
Profit after tax/Total Equity: 9.3% 5.1%
EPS- (HY end paid up)-Rs: 7.44 4.43
Price/Earnings Ratio: 16.00 -
Stock Dividend: 20% 20%
Cash dividend paid, previous year: 15.0% 12.5%
Cash flow Summary (Half Year) 2005 2004
Net Cash flow from Operations: -6,096 7,484
Net Cash flow from Investing: -1,071 5,315
Net Cash flow from financing: -748 -529
Net Cash flow position for period: -8,104 12,325
Cash and bank at beginning: 142,996 82,455
Cash and bank at end of period: 134,892 94,780
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COMPANY INFORMATION: Chairman and President: S. Ali Raza; Director: Dr Waqar Masood Khan; Secretary to Board of Directors: S.M. Rafique; Auditors: 1-Taseer Hadi Khalid & Co, Chartered Accountants; 2- Ford Rhode Sidat Hyder & Co, Chartered Accountants; Legal Advisor: Mandviwala & Zafar, Advocates and Legal Consultants; Registered and Head Office: National Bank Building, I.I. Chundrigar Road, Karachi -Web Address: www.nbp.com.pk
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