Once badly stung in the previous political regime, Bank of Punjab under the renewed management is on damage control. Had it not been the support of Punjab government - the majority shareholder - and its injection of Rs10 billion into the bank, BoP would never have been able to raise its equity from a meager Rs2.9 billion to Rs10.1 billion by the end of 2011 in just a year.
The restructuring process under the leadership of Naeem Khan convinced the rating agency Pacra earlier this year to change the negative outlook to stable. The bank has restructured over Rs40 billion of the portfolio. However, despite the Herculean effort, the banks toxic assets by September 2012 are over 40 percent of the portfolio. This is after the cash recovery of over Rs20 billion.
The net advances of the bank grew by eight percent during 9MCY12 to stand at Rs137 billion, while the deposits are moving at snails pace exhibiting a mere three percent growth to reach Rs242 billion. The bank is working on slashing the cost of deposits, but still a lot need to be done as its CASA ratio hinges at 54 percent, compared to 68 percent and 56 percent of Bank Alfalah and Faysal Bank respectively.
In 9MCY12, BoP demonstrated a healthy 23 percent growth in the mark-up earned with a check on markup expense. This is augmented by around Rs300 million reversals in provisioning, although the pace of reversal significantly slowed down from the past years levels.
With the control on the toxic assets and decent growth in deposits, the management is rightly focusing on the other operating income, which is more than doubled in a years time to stand at Rs2.26 billion during 9MCY12.
The bank is slowly and gradually pacing up to the similar sized banks, but it still has a long way to go. It posted net earnings per share of Rs1.23 (Rs648 million) in 9MCY12 as compared to a loss per share of Rs0.3 similar period last year.
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BANK OF PUNJAB
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(Rs mn) 9MCY12 9MCY11 chg
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Mark-up Earned 18,457 14,931 24%
Mark-up Expensed (16,798) (15,149) 11%
Net Markup Income 1,659 (218)
Provisioning 290 1,432 -80%
Net Mark-up income after provisions 1,949 1,214 61%
Other income 2,257 1,378 64%
Operating revenues 3,915 1,160 238%
Other expenses (3,218) (2,847) 13%
Profit before taxation 988 (255)
Profit after taxation 648 (161)
EPS (Rs) 1.23 (0.30)
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Source: Company Accounts
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