Commercial Banks: NATIONAL BANK OF PAKISTAN - Nine Months Ended September 30, 2006 (Un-audited)
National Bank of Pakistan (NBP) was established under the NBP Ordinance, 1949. NBP, listed on all the stock exchanges of the country, is providing commercial banking and related services in Pakistan and overseas.
The bank operates 1,224 (2005: 1,224) branches in Pakistan and 18 (2005:18) overseas branches. NBP shares are largely (75.48%) held by SBP/GOP while some shares have been offered to general public.
NBP, as an agent to SBP, handles treasury transactions for GOP. Under a Trust Deed, the bank provides services as Trustee to National Investment Trust (NIT) including safe-custody of securities. Further, upon amalgamation of NDFC, NBP manages on behalf of GOP, the Long Term Credit Fund established from proceeds of loans disbursed for financing private sector energy development projects. Fund assets are accounted for separately from those of the bank.
NBP has five wholly-owned subsidiaries, two majority-owned companies and joint ventures including United National Bank Limited and First Credit & Investment Bank Limited. The Overview of financial statements, however, is that of NBP alone, without consolidation with its subsidiaries.
JCR-VIS has reaffirmed NBP's stand alone long term rating at "AA+" while short term rating has been maintained at "A-1+". Entity rating is maintained at "AAA"/"A-1+".
Total assets of NBP increased by 8% to Rs 625 billion on September 30, 2006 compared to Rs 578 billion on December 31, 2005. Increase has occurred in Lending to Financial Institutions (7%), Investments (7%) and Advances (12%). Apart from retention of profits, the increase in assets has been financed through 4% increase in Deposits to Rs 483 billion (77% of Total Assets) on September 30, 2006 compared to Rs 463 billion (80% of TA) on December 31, 2005.
NBP's gross NPLs on September 30, 2006 stood at Rs 35.479 billion (December 31, 2005: Rs 33.738 billion). In percentage terms gross NPLs on September 30, 2006 are 10.7% of gross Advances (December 31, 2005: 11.3% of GA). On net basis, NPLs are only 1% of net Advances on both these dates. NBP has made full provision against NPLs according to SBP criteria.
Of the Total Investment as on September 30, 2006, Available for Sale Investment comprised 79% (December 31, 2005: 76%). Investment in TFCs, Bonds, PTCs, etc include Rs 741 million (2005: Rs 741 million) which are considered non-performing.
The bank's investment in NIT Units and shares of Bank Al-Jazira contribute over 90% Surplus on Revaluation of Assets as on September 30, 2006.
THE SITUATION EXPLAINED IN NOTES TO THE FINANCIAL STATEMENTS IS GIVEN BELOW:
NIT UNITS: The bank has investment in 365,284,216 NIT units in respect of which GOP issued a letter of comfort (LoC), dated August 8, 2001, stating that on bank's willingness to continue holding the units for five years from the date of LoC; NIT will be facilitated to redeem the units at Rs 13.70 per unit. During 2005 on the directives of MoF, the bank acquired 5,542,620 units from small-sized LoC holders at a price of Rs 205.077 million. In accordance with SBP's concurrence, these units have been valued at market value (repurchase price) aggregating to Rs 17,077 million (2005: Rs 18,684 million). Further, the Privatisation Commission offered all the LoC holders, including the bank , following two options under the Scheme of Privatisation of the Trust:
right to manage the fund represented by the respective LoC holder's portion of the assets/shares and pay for the management rights as per the terms contained in the "Scheme" (scheme for the split-sell and settlement of NIT under GOP's privatization campaign ; or the LoC holder's holding of NIT Units would continue to be managed by NIT as part of a separate split fund. The bank has conveyed its concurrence for option (a).
BANK AL-JAZIRA SHARES: The bank holds 6,562,500 (2005: 875,000) shares in Bank Al-Jazira incorporated in the Kingdom of Saudi Arabia, being 5.83% (2005: 5.83%) holding in the total equity. During the period, BAJ issued 50% bonus shares after a share split of five shares for one. During 2005, NBP was granted permission to open a branch in Saudi Arabia by the Saudi Arabian Monetary Authority (SAMA).
The bank has been given to understand by SAMA that it has to divest the holding in Bank Al-Jazira and accordingly, the Board of Directors has authorised the management to initiate process of disinvestment at the best possible price in coordination with SAMA. From 2005, in accordance with SBP's concurrence the investment has been marked to market with closing price as quoted on the Saudi Stock Exchange.
Total mark up income of NBP for first nine months of 2006 increased by 36% to Rs 31.595 billion compared to Rs 23.272 billion for corresponding nine months of previous year. Total mark up expense represented 31 % of total mark up income for nine months ended September 30, 2006 (corresponding nine months of 2005: 30%). Low payout to the Depositors is one of the reasons for high profitability of the bank. NBP, the Nation's Bank and SBP are urged to consider revising upward the basis for determining the rate of profit to the Depositors.
The nine months under review were closed with After-Tax Profit at Rs 14.008 billion, registering an increase of 61% over profit for the previous year's corresponding nine months at Rs 8.707 billion. ROE for the nine months is 28% (corresponding nine months of 2005: 24%). Performance statistics are given below.
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Performance Statistics (Un-audited) (Rs, million)
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Balance Sheet As Sep. 30, As Dec. 31,
2006 2005
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Total Assets 625,592 577,719
Cash, balances with banks 102,939 102,216
Lending to financial institutions 17,496 16,283
Investments-Net 168,705 156,986
Advances- Net 300,575 268,839
Borrowing from fin. Institutions 8,967 8,757
Deposits, other accounts 483,232 463,426
Total Liabilities 532,969 503,378
Net Assets 92,623 74,341
Share Capital 7,091 5,909
Reserves & Un-app. Profit 42,737 30,250
Sub total- Equity 49,828 36,159
Surplus on Revalue, Assets 42,795 38,182
Equity incl. Revalue Surplus 92,623 74,341
Subordinated Loan 0 0
Equity, RS & Sub. Loans 92,623 74,341
Advances- Gross 332,059 299,423
Gross NPLs 35,479 33,738
Total Provision 31,484 30,584
Conting. & Commitments 298,162 216,046
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Ratios:
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Cash & bank / Total Assets 16% 18%
Investments / Total Assets 27% 27%
Advance- Net / Total Assets 48% 47%
Gross NPLs / Advances- Gross 10.7% 11.3%
Gross NPLs / Total Equity 71% 93%
Net NPLs / Advances -Net 1.33% 1.17%
Provisions / Advances - Gross 9.5% 10.2%
Deposits / Total Assets 77% 80%
Total Liabilities / Total Assets 85% 87%
Total Equity / Total Assets 8.0% 6.3%
Equity, RS & SLoans / TA 14.8% 12.9%
Deposits/ Equity- Times 9.7 12.8
Advances / Deposits 62% 58%
Investments / Deposits 35% 34%
Contin.& Comm./ Equity -Times 5.98 5.97
Book Value per Share 70.27 61.19
Quoted Price (31-10-06) - Rs 285.00 -
Price / Book Value Ratio 4.06 -
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Income Statement (9M) 2006 2005
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Markup- interest earned 31,595 23,272
Markup- interest expensed 9,875 6,981
Net Markup- interest income 21,720 16,291
Provisions and write offs 1,231 1,826
Net mark up income (aft. Prov.) 20,489 14,465
Total non-markup income 9,001 7,022
Income bef. Admn. Exp. 29,490 21,487
Admin Expenses, etc 9,327 8,413
Profit before Taxation 20,163 13,074
Current & deferred tax 6,155 4,367
Profit after taxation 14,008 8,707
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Ratios: (9-Month Basis)
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Markup earned/ Total Assets 5.1% 4.0%
Net Markup Income / TA 3.5% 2.8%
Net markup (aft. Prov.) /TA 3.3% 2.5%
Non-Markup Income / TA 1.4% 1.2%
Income before AE / TA 4.7% 3.7%
Admin Expenses / TA 1.5% 1.5%
Profit before Taxation / TA 3.2% 2.3%
Profit after taxation / TA 2.2% 1.5%
Profit after tax / Total Equity 28.1% 24.1%
EPS- (Period-end paid-up) - Rs 19.75 14.74
Price / Earnings Ratio 14.43 -
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Cash flow Summary (9M) 2006 2005
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Net Cash flow, Operations 4,765 -46,490
Net Cash flow, Investing -2,498 -655
Net Cash flow, financing -1,488 -743
Change in Net Liquidity 410 -47,859
Net Liquidity at beginning 101,583 142,995
Net Liquidity at end 101,993 95,136
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COMPANY INFORMATION: Chairman and President: Syed Ali Raza; Director: Dr Waqar Masood Khan; Auditors:1- M. Yousuf Adil Saleem & Co, Chartered Accountants; 2- Ford Rhode Sidat Hyder & Co, Chartered Accountants; Legal Advisor: Mandviwala & Zafar, Advocates and Legal Consultants; Registered & Head Office: National Bank Building, I. I. Chundrigar Road, Karachi; Web Address: www.nbp.com.pk
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