Half-year ended June 30, 2023: NBP’s PBT soars 41pc to Rs 47.7bn YoY

KARACHI: The financial results of National Bank of Pakistan (NBP) for the half-year ended June 30, 2023 were approved on August 29, 2023 by the Board of Directors in their meeting held at the Bank’s Head Office.

The meeting was chaired by the Chairman of the Board, Ashraf Mahmood Wathra. The President/ CEO of the Bank Rehmat Ali Hasnie was also present in the meeting.

Recording yet another period of a remarkable performance, the Bank reported a profit before tax (PBT) of Rs 47.7 billion, nearly 41 percent higher than Rs 33.9 billion for half year of 2022. The Bank’s performance remained particularly strong during the second quarter of 2023 as the Bank earned a PBT of Rs 29.5 billion as against Rs 18.2 billion earned in first quarter of 2023.

These results were driven through a commendable performance in both the fund based and non-fund based earning streams. Despite a continued challenging environment during the period, the Bank’s profit after tax more than doubled to Rs 26.0 billion depicting a massive increase of 114 percent over the Rs 12.1 billion for the first half period of the previous year. Accordingly, earnings per share closed at Rs 12.23 as against Rs 5.71 for first half of 2022.

This excellent performance was driven through an efficient portfolio-mix, maturity profiling, effective risk management and maintaining a stable funding pool that is delivering sustainable and improved operating performance.

In the increasing interest rate environment, gross interest income recorded a 141 percent increase YoY to close at Rs 432.3 billion being Rs 252.9 billion higher than Rs 179.4 billion for the same period of 2022. Similarly, the Bank’s cost of funds also recorded an increase of 184 percent YoY to close at Rs 359.2 billion. Accordingly, net interest income closed at Rs 73.1 billion, depicting a YoY increase of 38 percent.

Despite the challenging business environment and lackluster performance of the stock market during most of the period, the Bank generated total non-fund income amounting to Rs 19.0 billion which is 4.0 percent higher YoY.

Equity investment of the Bank generated a divided income of Rs 2.4 billion (June’22: PKR 1.9 billion), i.e. 22 percent higher YoY. Fee and commission income earned through branch banking operations stood at Rs 10.5 billion i.e. 3.0 percent higher, YoY.

Amidst the high inflationary pressures and depreciation in Rupee, operating expenses of the Bank for the half-year period under review amounted to Rs 43.9 billion which is 22.6 percent higher YoY as compared to Rs 35.8 billion for the similar period last year.

However, proactive cost management efforts contained expense growth to 19.2 percent over second quarter of 2022, improving the cost/income ratio from 50.1 percent in first half of 2022 to 47.6 percent in the first half of 2023. The Bank is currently investing significantly for a major upgrade of its IT systems and infrastructure.

As the Bank is following a prudent risk-profiling strategy, loan infection ratio stood at 14.5 percent slightly above the 14.3 percent as of December 2022. Accordingly, net provision charge amounted to Rs 0.4 billion i.e. significantly lower by 76.2 percent or Rs 1.3 billion as compared to Rs 1.7 billion for the first half of 2022. The key contributor towards this drop was the loans and advances that recorded a net reversal of Rs 0.95 billion. Specific and General provisions held against NPLs stood at Rs 204.1 billion (December 2022: Rs 190.7 billion) and Rs 16.7 billion (December 2022: Rs 17.3 billion), respectively. Thus, provision coverage at June 30, 2023 stood high at 92.9 percent.

With an 18.5 percent YTD growth in its assets base, the Bank achieved Rs 6.0 trillion milestone in its balance sheet as its total assets reached Rs 6.2 trillion from Rs 5.2 trillion at the end of 2022. This makes NBP the largest Bank in Pakistan in terms of total assets.

While investment (at cost) increased by 18.5 percent to reach Rs 4,156.9 billion, gross advances recorded a 5.6 percent growth to reach Rs 1,519.8 billion. The Bank maintains a strong funding and liquidity profile through a well-diversified funding portfolio.

As of June 30, 2023, total deposits amounted to Rs 3,451.7 billion. While CASA ratio stood at 79.6 percent, Liquidity Coverage and Net Stable Funding also remained high at 158 percent and 267 percent, respectively. Capital Adequacy Ratio further improved to 22.50 percent from 21.59 percent at the YE’22 depicting strong financial soundness of the Bank.

The Bank enjoys highest credit ratings of AAA / A1+ categories for both long term and short term respectively as reaffirmed by both PACRA and VIS Credit Rating Company in June 2023.

The Bank is operating one of the largest branch networks with more than 1,500 branches in Pakistan and is aggressively pursuing a major organizational transformation programme through IT upgrade, digital product enhancement and initiatives for promoting financial inclusion with a focus on commercial and rural segments. In parallel with its business growth initiatives, the Bank has continued to progress via remediation of legacy issues in the area of international franchise, risk management, asset quality, operational effectiveness and HR.

With delivery of the commendable financial results, the management’s strategic focus remains on enhancing its service quality levels, diversifying its outreach through digitalization, and increasing its range of product and services. As the Nation’s bank, enhancing access to financial services to all remains a goal of the Bank since its creation in 1949.

Copyright Business Recorder, 2023