22 listed banks profit surge to Rs 52.9 billion

The combined profit of 22 listed commercial banks has surged to Rs 52.9 billion in the nine month period ended on September 30 with a double digit growth of 15 percent over the corresponding period last year. The banking sector profitability growth was recorded at 42 percent to Rs 49.7 billion in the first half of 2007.
"The result was inflated due to abnormal gain of Habib Bank Limited (HBL) under the head "fair value adjustment of associate and joint venture", while the nine-month of 2007 results of HBL was restated inline with the guidelines issued by the State Bank of Pakistan", head of research at First Capital Equities Limited Muhammad Imran Khan said.
During the nine-month period, the cumulative net interest income of the sample banks was recorded at Rs 108 billion, a growth of 12 percent on year-on-year basis. The relatively lower growth is mainly attributable to the higher base effect.
Moreover, advances growth of the commercial banks recorded a decline of two percent in this period versus a nine percent increase in the corresponding period of last year. On the other hand, deposits growth was recorded at 15 percent in this period against six percent previously.
Interest expense paid to interest earned ratio also increased to 48 percent in the nine months period this year against 44 percent in the corresponding period last year.
Non-interest income of the sample banks witnessed an impressive growth of 39 percent at Rs 45 billion in this period. Major growth was witnessed in the capital gain head. Banks took advantage of bullish market trend and booked heavy capital gains.
Besides, BAFL also booked Rs 1.78 billion for the sell-off of its stake in Warid Telecom. "Provisions against non-performing loans increased b 37 percent to Rs 8.6 billion in the nine month period of 2007, which also caused bottom line to suffer", Imran added.
Out of total 41 scheduled commercial banks operating in Pakistan, 25 are listed at the Karachi Stock Exchange. With the exception of National Bank of Pakistan and KASB, all the listed banks have announced their nine months results ended on September 30. National Bank of Pakistan has delayed its result announcement by 15 days.
According to KSE notice, NBP is in the process of issuing Global Depository Receipts (GDRs), where it is required to include third quarter accounts in the offering documents that are to be filed with United Kingdom Listing Authority.
Since these accounts will require a limited review (audit), the management of the bank has asked for the said extension. The JS Bank is also excluded from the samples as it is the first year of its operations and its comparable figures are not available.