KARACHI: The Board of Directors of National Bank of Pakistan (NBP) met to review the financial performance of the bank and approved the condensed interim financial statements for the nine-month period ending September 30, 2021.
The Board observed that despite the economic challenges amidst the pandemic, the Bank has maintained its robust performance momentum across all business fronts. In pursuit of its vision to be the nation's leading bank enabling sustainable growth and inclusive development, the Bank made significant progress in organizational transformation, product digitalization and initiatives for promoting financial inclusion with a focus on commercial and rural segments.
The Bank has reported profit after-tax for the nine-month period ending September 30, 2021 of PKR 24.1 billion, or PKR 11.35 per share, on total revenue of PKR 99.5 billion. This is compared to profit after-tax of PKR 26.1 billion or PKR 12.28 per share, on total revenues of PKR 107.6 billion for the corresponding nine-month period of 2020. Notably, this is after substantial additional provisions of about PKR 12.2 billion taken in 2021.
In line with the industry-wide margin compressions, revenues of the Bank decreased 7.5 percent to close at PKR 99.5 billion (Sep'20: PKR 107.6 billion), primarily reflecting the impact of drop in the policy rate and normalization of yield on investment. The Bank recorded a net interest income of PKR 72.4 billion, driven by a PKR 240 billion growth in average earning portfolio. While gross mark-up/interest income of the bank closed at PKR 166.5 billion (19.2 percent down YoY), the interest/ mark-up expense also dropped significantly by 25.4 percent to PKR 94.1 billion. Despite the subdued trade activity during most of the period under review, non-mark-up/non-interest earning of the Bank remained high at PKR 27.1 billion (Sep'20: PKR 27.7 billion). Consequently, total revenue of the Bank closed at PKR 99.5 Bn (September'20: PKR 107.6 billion).
Despite inflationary pressures and higher operating costs (as the Bank continues uninterrupted delivery of services delivery during the pandemic contributing to Pakistan's economic growth and development), administrative expenses remained well controlled and recorded a marginal increase of 4.5 percent YoY to close at PKR 47.0 billion. This translates into a cost-to-income ratio of 47.3 percent, slightly up from 41.8 percent in 9M'20. During the period, NPLs of the Bank increased by 17.7 percent to close at PKR 201.7 billion (Dec'20: PKR 171.3 billion). To make its balance sheet more resilient in the prevailing circumstances, the Bank created a provision charge of PKR 12.2 billion during the period.
On the balance sheet side, NBP has one of the industry's largest balance sheets which further increased by 27.1 percent to PKR 3.8 trillion, in the nine months of 2021 from PKR 3.0 trillion level at the beginning of 2021. The Bank's Balance Sheet has grown on the back of stable deposit base expansion, leveraged with money market borrowings. Gross loans & advances of the Bank amounted to PKR 1,207.7 billion depicting a 4.1 percent increase from the year end 2020 levels.
Major share of the Bank's total funding comes from core customer deposits that contribute 87.2 percent (PKR 2,224.6 billion) of the Bank's total deposits that stood at PKR 2,551.6 billion. Compared to Dec 31, 2020 level, customer deposits have increased by 10.1 percent or PKR 204.0 billion.
The Bank's capital base continues to be enhanced as total Capital Adequacy Ratio improved to 22.20 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 16.70 percent (Dec'20:14.99 percent) against the requirement of 9.50 percent. The Bank's capitalization translates into a healthy leverage ratio of 3.6 percent which is well above the regulatory limit of 3.0 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 170 percent and 270 percent, respectively. With the continued healthy value generation for its shareholders, Net Assets at end Sep'21 stood at PKR 290.0 billion, translating into break-up value per share at Rs 136.3, which is 40 percent up from Rs 97.2 at the beginning of 2019.
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.
NBP's Islamic Banking is operating a network of over 200 dedicated branches throughout the country. Islamic Banking continues to focus on Commercial and SME businesses by expanding trade hubs to provide ease of service to these segments.
During Q3 2021, NBP won multiple awards from international and local publications/platforms. These include, among others, Best Bank for Agriculture Award, Corporate & Investment Bank of the Year - Pakistan, Corporate Client Initiative of the Year - Pakistan, Debt Deal of the Year - Pakistan, Project Infrastructure Finance Deal of the Year - Pakistan, Project Finance House of the Year for the year, Best Trade Finance Bank in Pakistan for 2021 and Best Corporate Reporting Award 2021.