Strong growth is not really a hallmark of the government run entities in Pakistan. But it is a norm among the big banks of the country; with the exception of National Bank of Pakistan. Far from the impressive bottom line growth of 32 percent, 18 percent and 8 percent reported by NBPs peers in the Big-5, the banks result for 1HCY12 shows a bottom line that is nearly static when compared to the same period last year. The results are well below the expectations of analysts - mainly due to the 8 percent decline in profits during the second quarter. This is due to high provisioning for diminution in value of the investment - it provided Rs2.3 billion in 2QFY12 as compared to Rs1.5 billion in the same period last year. Provisioning for bad loans is also on the rise, quarter on quarter. But NBP has not done badly in terms of its balance sheet growth - its advances have grown by 10 percent in the last six months and to the surprise of many, investments on net basis fell by 5 percent. It seems that the banks management is finally feeling motivated to lend to the private sector. Now that policy rate has dropped by 150 basis points, this trend may strengthen going forward. But the liability side is less. In the past six months deposits grew by a mere 2 percent, much lower than money growth. This is in sharp contrast to HBL whose deposits were up by a whopping 16 percent, crossing the trillion rupee mark. The fall in provisioning for bad debts is not proportionate to peers either. One good omen is that the overall size of bad debt is falling and the infection ratio is down from 14.7 to 14.2 percent; but it is still much higher than NBPs peers. Other income exhibited satisfactory growth of 7 percent in 1HCY12, compared to the same period last year. Lack of any credible cost cutting drive translated into an increase of 12 percent in operating expenses over the same time. The bank churned out growth in net profits of just one percent; hence delivering a rather ordinary performance in the first half of 2012.
=================================================== National bank of Pakistan =================================================== (Rs mn) 1HCY12 1HCY11 chg =================================================== Mark-up Earned 50,047 46,935 7% Mark-up Expensed (28,948) (24,249) 19% Net Markup Income 21,099 22,685 -7% Provisioning (3,349) (6,136) -45% Net Mark-up income 17,751 16,549 7% after provisions Other income 10,479 9,831 7% Operating revenues 31,578 32,516 -3% Other expenses (16,549) (14,721) 12% Profit before taxation 11,680 11,659 0% Profit after taxation 8,202 8,092 1% EPS (Rs) 4.43 4.37 ===================================================
Source: Company Accounts
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