The top line was not the problem, as the earning yields on assets increased considerably across the banking industry, given the interest rate journey north. That said, the NIMs underwent significant pressure and the gross spread ratio fell considerably from the year ago period. It was not easy keeping pace with the industry deposit growth, for smaller sized banks.

The balance sheet numbers are yet to be out but a look at the March end numbers shows, JSBL faced challenged on the liability front. The deposits growth was largely muted, and worryingly the deposit mix did not change for the better. In fact, both the current and saving accounts witnessed a decline, whereas term deposits increased – much in contrast to the general industry trend. The decline in CASA meant added pressure on cost of deposits, which eroded the NIMs during the period.

The non-core income stayed put, but JSBL would have ideally wanted more contribution especially in times of such squeezed margins. The fee and commission income was healthy, but the real dent came from loss on securities, which was somewhat mitigated by a sizeable increase in income from derivatives. The bank did well on account of keeping a tight lid on operating expenses, which was much needed.

But the provisioning expenses dealt the final blow, with a massive increase of over three times. Much of it is owed to the SBP’s advise to make provision of Rs792 million against certain loans and investments, spread equally over three reporting periods to the tune of Rs264 million each. The shareholders would take heart from the fact this was the last such provision, and the bank would hope to reduce the charges on this account going forward.