NBP’s 9-month pre-tax profit soars to Rs48.3bn, 20.1pc up YoY

KARACHI: The Board of Directors of National Bank of Pakistan (NBP or the Bank) met on Friday to approve the condensed interim financial statements for the nine months period ended September 30, 2022.

The bank has delivered another quarter of strong returns, and posted profit before tax of Rs 14.5 billion for the third quarter of 2022. Consequently, total nine month profit before tax stood at Rs 48.3 billion i.e. 20.1 percent higher than Rs 40.2 billion for the nine month period of 2021.

With strong income momentum and returns across major businesses segments, the bank’s fund-based net interest income was particularly strong. The bank has continued to provide support for its customers and clients facing an uncertain economic environment and higher cost pressures amid the devastating floods.

The bank achieved a 37 percent on YoY growth in its average earning assets. This volumetric growth, coupled with the impact of higher comparative policy rate, generated gross interest income of Rs 332.2 billion i.e. 100 percent higher than Rs 166.5 billion for the nine months of 2021.

Pursuant to an aggressive fund mobilisation, average interest bearing liabilities of the bank reached Rs 3,680.0 billion from Rs 2,610.0 billion in nine months of 2021. Consequently, in the higher average interest rate scenario, the bank’s cost of funds for nine months of 2022 amounted to Rs 251.6 billion. Accordingly, net interest income closed at Rs 80.6 billion, depicting 11.3 percent increase on YoY.

Despite a challenging business environment and lacklustre performance of the trade activity and stock market, the bank generated total non-fund income amounting to Rs 25.3 billion for the nine-month period, which is 6.6 percent lower, YoY. Equity investment of the bank generated dividend income of Rs 3.4 billion, 23.2 percent higher on YoY. Fee and commission income earned through branch banking operations stood at Rs 14.5 billion i.e. 13.9 percent higher YoY and are reflective of the bank’s widespread market outreach.

As the bank provides FX solution to a large number of corporates, its forex income for the period amounted to Rs 5.1 billion which is 5.6 percent higher on YoY. However, due to a sluggish performance of Pakistan Stock Exchange (PSX), the bank could generate capital gains of Rs 1.1 billion only as compared to Rs 5.4 billion earned in similar period last year. Consequently, total income for the nine months of 2022 period amounted to Rs 105.9 billion, i.e. Rs 6.4 billion or 6.4 percent higher, on YoY.

Reflecting the inflationary impacts, ad hoc allowance recently allowed to the employees and the bank’s investment into its IT systems and infrastructure, operating expenses for the period amounted to Rs 54.8 billion i.e. 16.5 percent up YoY. NPLs increased marginally by 6.4 percent to reach Rs 210.6 billion. As the bank is pursuing a prudent assets growth strategy, NPL ratio that stood at 16.7 percent in September 2021 improved to 14.9 percent in September 2022.

Positively, provision charge for the period amounted to Rs 2.8 billion i.e. Rs 9.4 billion or 77.1 percent lower than Rs 12.2 billion for nine months of 2021. In line with the SBP guidelines, the bank maintains adequate provisions against non-performing assets to strengthen its capital base. With Rs 192.2 billion held as specific provisions, NPL coverage ratio stood high at 91.3 percent.

Accordingly, the bank’s pre-tax profit for nine month of 2022 amounted to Rs 48.3 billion i.e. 20.1 percent up against Rs 40.2 billion for nine month 2021. The Finance Act-2022 brought in certain changes in corporate tax, which apart from increase in the statutory and super tax rate, also had a retrospective impact with reference to prior year’s earnings attributable to investments in the federal government securities. Resultantly, tax charge amounted to Rs 29.2 billion, translating into effective tax rate of 60.4 percent as compared to 40 percent for nine month of 2021. Resultantly, profit after tax for nine months of 2022 stood at Rs 19.2 billion as against Rs 24.1 billion for nine months of 2021.

This year, the bank has achieved Rs 5 trillion milestone in its balance sheet as its total assets increased by 34.3 percent to reach Rs 5,168.0 billion from Rs 3,846.7 billion at the end of 2021. This makes NBP the largest bank in Pakistan in terms of total assets. While investment increased by 73.2 percent to reach Rs 3,356.6 billion, gross advances recorded 8.4 percent growth to reach Rs 1,415.4 billion.

With a widespread and well-diversified market outreach, the bank maintains a strong funding and liquidity profile. As of September 30, 2022, total deposits amounted to Rs 3,010.8 billion. Average non-remunerative current deposits recorded a 13.3 percent growth. While CASA ratio stood at 81.7 percent, Liquidity Coverage and Net Stable Funding also remained high at 137 percent and 255 percent, respectively. Capital Adequacy Ratio improved to 21.85 percent from 20.39 percent at the YE’21 depicting strong financial soundness of the Bank. The bank enjoys highest credit ratings of AAA / A1+ for both long term and short term respectively as reaffirmed separately by both PACRA as well as VIS Credit Rating Company in June 2022.

The bank is pursuing a major organizational and technological transformation, product enhancement, digitalization and initiatives for promoting financial inclusion with a focus on commercial and rural segments. In parallel with its business growth initiatives, the Bank has also continued to progress via remediation of legacy issues.

As the Nation’s Bank, going forward, NBP’s strategy focuses on enhancing its service quality levels, diversifying its outreach through digitalization, and increasing its range of product and services.

Copyright Business Recorder, 2022