KARACHI: National Bank of Pakistan (NBP) on Friday reported profit after-tax for the half-year ending June 30, 2021 of Rs 17.0 billion, or Rs 7.97 per share, on total revenue of Rs 65.4 billion.
This is compared to profit after-tax of Rs 15.1 billion or Rs 7.14 per share, on total revenues of Rs 66.8 billion for the corresponding half year period of 2020. Strong financial results demonstrate the resilience of the Bank’s business model and the efforts of its staff during this period.
The Board of Directors of NBP met under the Chairmanship of Zubyr Soomro, on August 26, 2021 to review the performance of the Bank and approved the condensed interim financial statements for the half-year ending June 30, 2021.
Revenues decreased two percent from the prior-year period, primarily reflecting the impact of drop in the policy rate and normalization in market activity. Gross mark-up/interest income of the Bank closed at Rs 108.0 billion, which is 25.7 percent below, YoY. Likewise, the interest/mark-up expense also dropped significantly by 37.4 percent to Rs 60.6 billion. Consequently, net interest/mark-up income of the Bank stood at Rs 47.4 billion, i.e. marginally 2.2 percent lower, YoY. Given the subdued trade activity during most of period under review, non-mark-up / non-interest earning of the Bank closed 1.6 percent lower at Rs 18.0 billion (Jun‘20: Rs 18.3 billion). Accordingly, total revenue of the Bank closed 2.0 percent down YoY at Rs 65.4 billion (June‘20: Rs 66.8 billion).
Despite inflationary pressures and higher operational costs amidst the pandemic, administrative costs remained well controlled and recorded a marginal increase of 3.7 percent YoY to close at Rs 30.6 billion. This translates into cost-to-income ratio of 46.8 percent, slightly up from 44.2 percent in the first half of 2020. During the period, NPLs of the Bank increased by 7.7 percent to close at Rs 184.4 billion (Dec’20: Rs 171.3 billion). Proactively moving from ‘incurred’ to ‘expected’ credit loss model, the Bank created adequate provision charge of Rs 6.8 billion to make its balance sheet more resilient in the prevailing circumstances. Positively, provision charge for the period is 57 percent below the Rs 15.6 billion provision charge in the first half of 2020.
On the balance sheet side, the Bank’s capital discipline has improved significantly. While complying with the regulatory capital requirements, the Bank’s total Capital Adequacy Ratio improved to 22.18 percent (Dec’20:19.78 percent). Strength of the capital is evident from the Bank’s Common Equity Tier-1 (CET1) to total risk weighted assets ratio which comes to 16.69 percent (Dec’20:14.99 percent) against the requirement of six percent. The Bank’s capitalization also resulted in a leverage ratio of 3.63 percent which is well above the regulatory limit of three percent.
This capital position enables the Bank to absorb shocks in the foreseeable future and leverage emerging business opportunities to create value for its shareholders. The Bank’s Liquidity Ratio and Net Stable Funding Ratio improved to 158 percent and 282 percent, respectively. Net Assets at end of June 2021 stood at Rs 285.5 billion, translating into break-up value per share at Rs 134.2, which is 38 percent up from Rs 97.2 at the beginning of 2019. The Bank’s total assets closed at Rs 3,616.9 billion i.e. 20.2 percent higher than Rs 3,008.5 billion level of the year end 2020. The Bank enjoys highest local credit ratings of AAA/A1+ categories for long term and short term respectively as reaffirmed by both PACRA and VIS Credit Rating Company.
The BoD also deliberated on the impact of Covid-19 pandemic and its specific implications for the banking industry in Pakistan. Being categorized as a systemically important bank in Pakistan, NBP has depicted strong resolve to serve its customers across the country despite facing significant operational challenges.
The Bank is making progress on its strategy refresh across its consumer and institutional businesses forplaying its systemically important role in the economy while maintaining a strong and resilient balance sheet to deliver performance for shareholders. The management is committed to modernising the Bank to achieve excellence in risk and control environment, business processes and service quality to clients. For the year 2021 and beyond, the Bank’s business strategy will continue to focus on financing and supporting underserved sectors including SME, Microfinance, Agriculture Finance and the PM’s Low-Cost Housing initiative on a priority basis.—PR
Copyright Business Recorder, 2021
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