The National Bank of Pakistan (NBP) profit for the year ended December 2004 would range between Rs 5.5 billion to Rs 6 billion, showing an approximate growth of 44 percent as compared to the last year because of rise in advances and higher dividend payout from the National Investment Trust (NIT). The NBP board will hold meeting on Friday to announce its results for 2004. Faisal Jiwani, research analyst from Investcapital Securities said that the National Bank is likely to report a net income of Rs 5.5-5.6 billion (EPS: 11.2-11.4) as compared to the last year's profit of Rs 4.2 billion (EPS: Rs 8.53), showing a growth of 31-33 percent on YoY basis.
Net Interest Income (NII) is expected to grow by 10-12 percent to Rs 13.9 billion to Rs 14.2 billion in 2004 as compared to Rs 12.7 billion in 2003 on the support of over 30 percent advances growth during the year.
Commission and brokerage income is expected to be around Rs 4.2 billion, up by 28 percent from the last year's income of Rs 3.2 billion.
Major portion of this income comes from the facilities provided for trade to importers and exporters. The increase in this income reflects the growth in trade that Pakistan witnessed during the year.
The NBP's advances are likely to increase by 35 percent from Rs 161 billion to Rs 217 billion during 2004. For 2005, we expect the NBP's advances to grow by 16 percent.
Deposits of the NBP are expected to grow by Rs 77 billion or 20 percent to Rs 473 billion in 2004 as compared to Rs 396 billion in 2003. Till end-September 2004, the National Bank held around Rs 20 billion of the total industry deposits. For 2005, we expect the NBP's deposits to grow by 16 percent. The bank is expected to pay out cash dividend of Rs 2-2.5 per share with its annual results.
Tanvir Abid, head of research, Live Securities, said that the net income is estimated to mark a 41 percent rise to Rs 5.93 billion translating into an EPS at Rs12.03. During FY03, the NBP's earnings stood at Rs 4.2 billion (EPS: Rs 8.53). The bank's profitability growth is to result from growth in interest income, significant increase in advances and higher dividend income from the NIT. Interest spreads or margins are also to be fuelled on the consolidating trend in secondary market yields.
For FY04 we expect the NBP to declare Rs 1.75-2 per share cash dividend (Rs 1.25 per share cash payout during 2003). In line with the historical norms, a bonus payout is also a strong possibility.
Revaluation or capital gains potential on holding of NIT units the NBP holds approximately 360 million units of NIT. Last year, NIT declared Rs2.55 per unit cash dividend, estimated to boost NBP's FY04 earnings per share by approximately Rs 1.77. The NBP's holding of NIT units also provides huge revaluation or capital gains potential. In its books, the NBP carries NIT units at approximately Rs 13.6 per unit.
Hiza Zia, research analyst from First National Equities said that the NBP will post earnings of Rs 6 billion for 2004 due to massive growth in advances, reduction in income tax rate and higher dividend payout from the NIT. The bank may pay a dividend in the range of Rs 1.5 per share as compared to Rs 1.25 per share.