KARACHI: The Board of Directors of National Bank of Pakistan “NBP” “the Bank” met on Thursday to approve the interim condensed financial statements for the quarter ended March 31, 2023.
For Q1’23, the Bank generated gross interest income of Rs 192.4 billion i.e. more than double the Rs 79.2 billion for the similar period of 2022. The Bank’s investments portfolio averaged Rs 3,519.2 billion (Mar’22: Rs 1,984.6 billion) and generated mark-up/interest income of Rs 146.2 billion.
Whereas, the placements averaged Rs 66.2 billion (Mar’22: RS 110.6 billion) and generated mark-up income of Rs 2.7 billion (Mar’22: Rs 2.7 billion).
During the quarter, the Bank’s loan book averaged Rs 1,411.4 billion and generated mark-up income of Rs 43.5 billion i.e. Rs 17.3 billion or 66.2 percent higher than Rs 26.2 billion for Q1’2022. This significant growth in earnings was achieved through both, a volumetric growth, as well as the favourable YoY rate variance. Likewise, cost of funds for the period also recorded a significant YoY increase and amounted to Rs 159.9 billion as against Rs 53.4 billion for the corresponding period of 2022.
Consequently, net interest income for the period closed at Rs 32.5 billion, depicting a 26.1 percent increase against Rs 25.8 billion of Q1’22. Non-fund income for the period stood at Rs 7.5 billion which is Rs 0.6 billion or 7.3 percent lower than Rs 8.1 billion of Mar’22. Reflecting the inflationary pressures and the Bank’s continued investment into its IT systems & infrastructure, operating expenses amounted to Rs 21.2 billion which is 26.3 percent higher YoY.
The Bank is investing significantly to improve & strengthen its IT infrastructure & systems for creating synergies in business processes, rationalising operating costs and achieving higher efficiency. Overall, operating costs translate into a cost-to-income ratio at 52.9 percent which is in line with the industry norms.
Positively, provision charge amounted to Rs 0.68 billion as compared to Rs 1.1 billion a charge for Q1’ 2022. As taxation charge amounted to Rs 7.5 billion, profit after-tax stood at Rs 10.7 billion i.e. Rs 0.85 billion or 8.7 percent higher than Rs 9.8 billion for Mar’22. This translates into Earnings per Share of Rs 5.02 as compared to Rs 4.62 for Mar’22.
Total assets of the Bank amounted to Rs 6,055.6 billion, depicting a 15.6 percent increase from Rs 5,240.4 billion levels of December 31, 2022. In the prevailing high interest rate scenario, the Bank is pursuing a prudent loan growth strategy for better credit risk management.
Accordingly, the loans & advances of the Bank amounted to Rs 1,452.9 billion i.e. slightly above the Rs 1,438.6 billion at end of the year 2022. Given the limited quality loan growth market and a steady growth in customer deposits, excess liquidity with the Bank is mostly placed in shorter-term government securities to capitalize on price volatility in the currently hiking policy rate environment.
The Bank is maintaining a diversified investment portfolio across zero risk weighted GoP instruments, high dividend yielding equities and other interest-bearing financial instruments. As at March 31, 2023, the Bank’s investments amounted to Rs 3,799.7 billion. The Bank achieved approx. 12 percent growth in deposits that stood at Rs 2,976.2 billion as compared to Rs 2,666.2 billion of December 31, 2022.
Major share of the Bank’s funding comes from customer sticky deposits that contribute Rs 2,706.5 billion or 90.9 percent of the total deposits with CASA ratio at 79.4 percent. Liquidity Coverage Ratio and Net Stable Funding Ratio remained over the regulatory requirements as the same stood at 166 percent (Dec’22:147pc) and 273 percent (Dec’22:251pc), respectively vis-à-vis regulatory requirement of 100 percent for each.
Net Assets amounted to Rs 304.95 billion translating into a break-up value of Rs 143.3 per share (YE’22: Rs 141.4). Total Capital Adequacy Ratio stood at 20.06 percent with Tier-1 capital adequacy ratio at 15.37 percent; as compared to 21.59 percent and 16.30 percent, respectively, at YE’22. Other financial soundness ratios are well compliant with applicable regulatory requirements.
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.
Commenting on the quarterly performance, the Bank’s President/CEO(A), Rehmat Ali Hasnie, appreciated that the strategic delivery and financial results were testament to the efforts & dedication demonstrated by the Bank’s employees.
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 products and services suite.
Copyright Business Recorder, 2023
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