NIB: Looking sharp

The half-yearly financial result posted by NIB Bank provided reasons to believe in the future of the bank for its shareholders. The banks top line posted a modest improvement; the mark up earned improved by five percent over 1HCY11 to reach Rs6.988 billion. But the real surprise came from the bottom line. After churning out a massive loss before taxation of Rs1.248 billion in the corresponding period last year, this time around the bank almost got out of the red with a comparatively miniscule net loss of Rs45 million. Massive provisioning for bad loans last year dragged down the bank deep into the red zone. This time around there has been considerable respite on that front as provisioning for NPLs dropped massively from Rs3.145 billion in 1HCY11 to Rs149 million in 1HCY12. The banks performance over the first half of CY12 proves the benefits that accrue when banks perform their role as financial intermediaries effectively. During the period under consideration, NIBs advances improved while reliance on government securities as investments declined. The bank packed another positive surprise for investors as it bucked the industry trend to post improvement in its gross spread ratio which improved significantly from 13.5 percent in 1HCY11 to 19.4 percent in 1HCY12. This is all the more impressive considering that the SBP actually increased rates offered to depositors by 100bps during this period.

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NIB Bank Limited
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(Rs mn)                          1HCY12      1HCY11       chg
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Mark-up Earned                   6,988       6,669         5%
Mark-up Expensed                (5,635)     (5,767)       -2%
Net Markup Income                1,353         902        50%
Provisioning                      (149)     (3,145)      -95%
Net Mark-up income               1,204      (2,244)
after provisions
Other  income                    1,087         895        22%
Operating revenues               2,440       1,796        36%
Other  expenses                 (2,650)     (2,483)        7%
Profit before taxation              29      (3,703)
Profit after taxation              (45)     (1,248)      -96%
EPS (Rs)                         (0.00)      (0.31)
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Source: Company Accounts