The National Bank of Pakistan (NBP), the country's largest lender to announce financial results on Monday and analysts expect that earnings of the entity to range between Rs 12.2 billion to Rs 13.2 billion for 2005 with expectation of declaring dividend and bonus shares.
"We expect the NBP to announce after-tax earnings of Rs 12.2 billion-Rs 12.4 billion (EPS Rs 20.70-Rs 21.00 ). This would be a growth of 96-99 percent over last year's earnings of Rs 6.24 billion (EPS Rs 10.57)" said an analyst from Investcapital Securities.
The NBP is likely to announce a cash dividend payout in the range of Rs 2.00-2.50 per share, and a 10-20 percent bonus issue along with this cannot be ruled out.
Contributors to the bottom line would be the jump in net interest income, fee, commission, and brokerage income and dividend income from NIT and other equities that the bank holds.
"We do not believe that any extra income will be recorded from the sale of NIT units or Bank Al Jazira's shares, as both these investments still lie on the books of the bank. Any deal on these accounts will increase the income in 2006 or later", he said.
The NII is expected to increase by 67 percent from Rs 12.9 billion to Rs 21.5 billion. This would be on the back of increasing advances of the bank combined with increase in spreads. The bank's spread has risen due to two major reasons, the increasing interest rates, and an improved share of consumer loans in total loan portfolio of the bank.
The fee, commission, and brokerage income of the bank is expected to have increased marginally close to 5 percent.
Furthermore, the dividend income from NIT is also expected to boost the bottom line of the bank as the NIT units on the books of the bank returned around Rs 1.23 billion as dividend income. Total dividend, including that from the NIT is expected to be around Rs 1.8 billion in 2005.
"We expect the NBP will post 111 percent net profitability improvement from Rs 6.24 billion (CY04) to Rs 13.2 billion (CY05E). Likewise, EPS for CY05 is likely to improve to Rs 22.35 compared to Rs 10.57 for CY04", said a research analyst from First Capital Equities. The bank is expected to announce a cash dividend of Rs 1.75-Rs 2.50 and stock dividend of 20-30 percent.
The probable offload of Bank Aljazira's which is likely to result in Rs 19.3 billion -Rs 20.4 billion capital gains (Rs 32.7-Rs 34.5 per share), has turned NBP into an apple of every investors' eye.
The earnings would higher because increase in net interest income growth, 24 percent non-interest income growth, and reduced effective tax rate on the back of 300 basis points cut in tax was announced in budget FY06.
The National Bank appears very zealous to open its branch in Saudi Arabia and some progress has also been achieved pertaining to the matter. Thus, chances are high that unrealised capital gains on NBP's investment in shares of the Bank Aljazria would be booked during the ongoing financial year (CY06). Incorporating impact of potential capital gains from disposal of 87,5000 shares of Bank AlJazria possessed by the NBP, in CY06 earnings, our expectations soar to net profit after-tax of Rs 36.07 billion-Rs 37.14 billion or earning per share of Rs 60.03-Rs 61.84. Excluding these gains, we are expecting recurring income of Rs 16.74 billion or EPS of Rs 27.32 for CY06. These capital gains, if booked in CY06, will provide one-off push to equity causing gigantic upsurge of 55-57 percent in CY06.
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