The profit after tax of National Bank of Pakistan increased by 21 percent to Rs 11.363 billion in the nine-month period ended September 30, 2010 as compared to Rs 9.400 billion earned in the corresponding period in 2009. The boar of directors of the bank in its meeting held on Friday declared that the bank's earning per share increased to Rs 8.45 in the period under review against Rs 6.99 in the same period a year ago.
According to the financial results sent to Karachi Stock Exchange (KSE), the bank's profit before taxation increased to Rs 16.630 billion in this period against Rs 14.0 billion in the same period last year.
The bank recorded impressive growth in terms of profit and balance sheet despite challenging external environment. After tax profit of the bank stands at Rs 11.4 billion showing an increase of Rs 2.0 billion or 21 percent compared to corresponding period. Net interest income of the bank registered an increase of around Rs 4.0 billion or 14 percent. The increase is attributed to both volume and rate increase. This growth was made possible by across the board increase in all areas.
Non-interest/mark-up income recorded an increase of Rs 148 million despite no dividend on NIT units, which last year was 1.3 billion as these units were redeemed in December 2009. This reduction in dividend income was compensated by an impressive increase in capital gains as the bank capitalised on good opportunities for sale of its shares portfolio.
Administrative expenses show an increase of Rs 3.9 billion or 25 percent compared to corresponding period mainly due to inflation linked salary increases and increase in other expenses mainly related to inflation. Due to focused approach, NPL provisioning during the period decreased compared to the corresponding period last year, provision against investments were higher mainly on account of impairment provision against shares.
Deposits increased by Rs 17 billion from December 31, 2010, whereas compared to corresponding period September 30, 2009 deposits are higher by Rs 90 billion or 14 percent. The increase in deposits was mainly recorded in CASA (Current and Saving) categories. Advances reflect a decline of Rs 27 billion mainly on account of repayment of seasonal finances and conversion of some power related project loans into term finance certificates due to which the increase is reflected in investments.
The JCR VIS Credit Rating Agency has reaffirmed NBP's long-term credit rating of 'AAA/A-1+' on a standalone basis. This rating reflects bank's well-capitalised position, diversified deposit base and extensive outreach in the domestic market.
Going forward the bank is making concerted efforts to focus on recoveries as well as on increasing its CASA deposits so as to reduce the cost of funds and improve its margins. During the month of August 2010 the bank opened its first branch in Riyadh Saudi Arabia. This will be an excellent venture as the bank shall focus on capturing sizeable portion of bilateral trade and investment business. The Bank is also making progress in the implementation of the 'Core Banking Software'. This conversion of the bank's I.T. platform will give a competitive advantage for further market penetration and new venues for income generation.
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