1H’24: NBP records total income of Rs96.8bn, up 5.1pc YoY

KARACHI: The Board of Directors of National Bank of Pakistan “NBP” “the Bank” met on August 28 to approve the interim condensed financial statements of the Bank for the half-year ended June 30, 2024.

Demonstrating yet another period of a remarkable performance, the Bank reported a total income of Rs 96.8 billion, a 5.1 percent increase from Rs 92.2 billion in H1’23. The Bank’s performance was particularly stronger during Q2’24, with total income of Rs 54.4 billion compared to Rs 42.5 billion earned during Q1’24. These results were driven by a strong performance across both fund-based and non-fund-based earning streams.

In a stable interest rate environment, the Bank’s gross interest income surged by 30.1 percent YoY to close at Rs 562.2 billion, an increase of Rs 130.3 billion from Rs 432.3 billion for the same period in 2023. Similarly, the Bank’s cost of funds also rose by 36.7 percent YoY, reaching Rs 490.8 billion. Consequently, net interest income closed at Rs 71.8 billion, reflecting a small decrease of 2% YoY.

In the booming performance of the stock market during most of the period under review, the Bank recorded gain on securities amounting to Rs 5.8 billion, taking the total non-fund income to Rs 25.1 billion, which is 31.7 percent higher YoY. Equity investment of the Bank generated a divided income of Rs 3.0 billion as against Rs 2.4 billion for the half-year ended June 30, 2023. Fee & commission income earned through branch banking operations also stood high at Rs 12.1 billion, showing a YoY increase of 14.7 percent.

Amidst high inflationary pressures, operating expenses of the Bank for the half-year period under review amounted to Rs 49.1 billion (excluding extraordinary item) which is 11.3 percent higher YoY as compared to Rs 44.1 billion for the similar period last year. The Bank is currently investing significantly for a major upgrade of its IT systems & infrastructure.

A major development during the period was that the Honourable Supreme Court of Pakistan (in Review Jurisdiction), by its order dated 27th March 2024, dismissed all the civil review petitions filed by the Bank, as a result of which the Supreme Court’s earlier decision dated 25th September 2017, in respect of the pension litigation, has now attained finality. This would bring a long-lasting uncertainty to an end. In compliance of the judgement, the Bank has recognised total expense of Rs 49.0 billion as an extraordinary/unusual item, and has made payments to majority of petitioners as well as non-petitioners.

Consequently, the Bank’s profit before tax for the six-months period closed at Rs 514.8 Mn (Jun’23: Rs 47.7 billion), whereas profit after tax closed at Rs 251.1 Mn (Jun’23: Rs 26.0 billion).

Effective January 1, 2024, the Bank has adopted International Financial Reporting Standard IFRS 9. This resulted in changes in the Bank’s accounting policies for recognition, classification and measurement of financial assets and financial liabilities and impairment of financial assets.

As the Bank is following a prudent risk-profiling strategy, net reversals in provision during the period amounted to Rs 1.8 billion against a total charge of Rs 0.4 billion for the corresponding half-year period of 2023. The key contributor towards this drop was the loans & advances that recorded a net reversal of Rs 1.8 billion. Credit loss allowances held against Stage-3 NPLs stood at Rs 218.5 billion (Dec’23: Rs 203.6 billion). Thus, provision coverage at June 30, 2024 stood high at 100 percent.

With a 6.6 percent YTD growth in its assets base, the Bank achieved Rs 7 trillion milestone in its balance sheet as its total assets reached Rs 7.1 trillion from Rs 6.7 trillion at the YE’23. While investment (at cost) increased by 7.0 percent to reach Rs 4,699.9 billion, gross advances recorded a 5.6 percent decrease to close at Rs 1,540.1 billion.

The Bank maintains a strong funding and liquidity profile through a well-diversified funding portfolio. As of June 30, 2024, total deposits amounted to Rs 4,103.5 billion. While CASA ratio stood at 80.1 percent, Liquidity Coverage and Net Stable Funding also remained high at 197 percent and 174 percent, respectively.

Total Capital Adequacy Ratio stood at 24.72 percent, against 25.47 percent at the YE’23. This drop in capital is mainly triggered by a one-off adjustment in the opening equity due to incremental provisioning as per IFRS 9. These ratios depict a strong resilience and financial soundness of the Bank. The Bank enjoys highest credit ratings of AAA / A1+ categories for both long term and short term respectively as reaffirmed by both PACRA and VIS Credit Rating Company in June 2024.

As of end of June 2024, the Bank achieved a major milestone in agriculture financing. The Bank became the largest lender to the agriculture sector by not only achieving a record disbursement of Rs 368 billion as well as achieving an outstanding loan book of Rs 104 billion. This is very much in line with the Bank’s vision of serving the nation by focusing on improving access to finance to priority sectors.

The Bank’s President & CEO, Rehmat Ali Hasnie, appreciated efforts & dedication demonstrated by the Bank’s employees towards financial results and strategic delivery. 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.

With delivery of the commendable financial results, the management’s strategic focus remains on enhancing its service quality levels, diversifying its outreach through digitalization, and increasing its range of product and services. As the Nation’s bank, enhancing access to financial services to all remains a goal of the Bank since its creation in 1949.