National Bank of Pakistan declares highest-ever 1Q PAT of Rs9.84bn

KARACHI: The Board of Directors of National Bank of Pakistan met on Thursday to review the financial performance of the Bank and approved the condensed interim financial statements for the three months period ended March 31, 2022.

Despite the continued economic challenges and uncertainties, the bank has delivered excellent results for its shareholders. This demonstrates the effectiveness of management’s strategies, resilience of the bank’s business model and the efforts of our staff during this period.

For the three months period, NBP recorded gross interest income of Rs 79.2 billion as against Rs 48.5 billion of the same period last year. Investment portfolio of the bank generated mark-up/interest income of Rs 50.4 billion being Rs 22.5 billion or 80.8 percent up against Rs 27.9 billion for first quarter of 2021. Whereas, the loan book generated mark-up income of Rs 26.2 billion i.e. Rs 6.5 billion or 32.8 percent higher than Rs 19.7 billion of first quarter of 2021.

In line with YoY increase in average policy rates, cost of funds for first quarter of 2022 amounted to Rs 53.4 billion for first quarter of 2022 depicting a 100 percent increase from Rs 26.9 billion in first quarter of 2021. Accordingly, Net Interest Income for the period under review closed at Rs 25.8 billion, depicting a 19.4 percent increase against Rs 21.6 billion of first quarter of 2021.

Non-fund income for the quarter closed at Rs 8.1 billion which is lower by Rs 0.4 billion or 4.7 percent YoY mainly due to lower capital gains on the back of lacklustre performance of the stock market. Management expects that, going forward, NFI will rebound as the stock market is showing signs of stability following the fading away of Covid-19 and some clarity on the political front.

In line with inflationary pressures and industry norms, NBP incurred operating expenses of Rs 16.7 billion which are 16.7 percent higher as compared to Rs 14.3 billion of first quarter of 2022, translating into cost-to-income ratio at 49.4 percent.

During this period, asset quality also showed some improvement as non-performing loans increased marginally by 3.0 percent to reach Rs 203.9 billion translating into a loan infection ratio at 14.7 percent showing some improvement against 15.2 percent at the end of 2021 and 16.2 percent at March 31, 2021. Net provision charge for the quarter amounted to Rs 1.1 billion only i.e. 65.7 percent or Rs 2.0 billion lower than Rs 3.1 billion for first quarter of 2021. With Rs 180.1 billion held as specific provisions against NPLs, coverage ratio stood high at 88.3 percent.

Accordingly, profit after-tax for the three months period amounted to Rs 9.84 billion being Rs 2.1 billion or 27.6 percent higher than Rs 7.7 billion for first quarter of 2021, the highest ever quarterly profit in the history of NBP.

As of March 31, 2022, total assets of the bank amounted to Rs 3,740.9 billion, depicting a 2.7 percent drop against Rs 3,846.7 billion as of December 31, 2021. This decrease was mainly due to a drop in seasonal year-end institutional deposits, which is expected to reverse in the following quarters. Gross advances total amounted to Rs 1,382.7 billion depicting a YoY increase of 5.9 percent, whereas with a 3.0 percent on YoY increase, investments amounted to Rs 1,981.0 billion.

The bank maintains strong funding and liquidity levels through a diversified funding portfolio. As of March 31, 2022, total deposits amounted to Rs 2,634.5 billion with major share coming from customer deposits that contributed 89.1 percent of total deposits. While CASA ratio stood high at 83 percent, Liquidity Coverage and Net Stable Funding also remained high at 141 percent and 246 percent, respectively.

Depicting financial soundness well above the minimum regulatory requirements, Total CAR improved to 21.78 percent and Tier-1 Ratio at 16.40 percent as compared to 20.39 percent and 15.42 percent, respectively at YE’21. Leverage ratio was satisfactory at 3.88 percent. With net assets amounting to Rs 298.3 billion i.e. 4.2 percent higher than Rs 286.2 billion at the end of 2021, break-up value per share increased to Rs 140.2 as against Rs 134.5 at the end of 2021. The Bank enjoys highest local credit ratings of AAA / A1+ categories for long term and short term respectively as reaffirmed by both PACRA and VIS Credit Rating Company.

Earlier, a cash dividend of Rs 1.0 per share was recommended by the Board of Directors in their meeting for approval of the audited Annual Financial Statement-2021, subject to approvals of the Federal Government under section 17 of the Banks (Nationalization) Act, 1974 and the State Bank of Pakistan, which have yet to be obtained.

During the last couple of years, the Bank has pursued organizational transformation, product enhancement, digitalization and initiatives for promoting financial inclusion with a focus on commercial and rural segments. In parallel with business growth initiatives, the bank has continued to progress via remediation of legacy issues in the area of Core Banking System upgrade, International Franchise, Risk Management, Asset Quality, Operational Effectiveness and HR.

Copyright Business Recorder, 2022