In a sharp contrast to its peers, NBPs first quarter results didn please investors a bit, as the banks profit level remained unchanged at last years level - keeping up with its no-growth performance seen in the year ending December 2010.
The banks top line grew in line with market expectations. But higher-than-expected growth in mark-up expenses - a year-on-year jump of around 11 percent as against the market expectation of around 6 percent - forced the bank to book only 9 percent gain in its net mark-up income. In contrast, NBPs peers, excluding UBL, have so far reported an average growth of 23 percent in net mark-up income in the first quarter.
The banks advances grew marginally 1.5 percent to Rs484 billion in the past three months, while its investment portfolio declined by 10 percent to Rs270 billion. At the same time, the banks ADR increased to 64 percent from around 57 percent during the three months ending March.
The decline in investment portfolio is anomalous to general market trend as the cumulative investments for all commercial banks in Pakistan had reached around Rs2,185 billion by March-end from around Rs2,089 billion at the end of December 2010.
NBPs deposit base, which is the largest in the industry fell by 9 percent to around Rs759 billion in 1QCY11. But this can be attributed to the typical first quarter trends seen industry-wide.
The banks administrative expenses grew in line with inflation rate, up almost 14 percent year-on-year. The administrative expenses totalled Rs6.5 billion as against Rs5.7 billion in the same quarter last year.
NBPs non-interest income fell by 8 percent year-on-year, in 1QCY11 on the heels of lower gain on sale of securities. The gain on sale of securities fell to Rs437 million as against Rs789 million in the same quarter a year earlier.
With NBPs CASA ratio lower than any of the top-five lenders in the country, according to CY10 numbers, the banks management needs to become more aggressive in collecting low cost deposit to record profitability growth down the line.
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National Bank of Pakistan
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Rs(mn) 1QCY11 1QCY10 chg
Mark-up earned 23,170 21,036 10%
Mark-up expensed 12,225 10,984 11%
Net mark-up income 10,945 10,052 9%
Provisioning 1,671 1,939 -14%
Net mark-up income after provision 9,274 8,113 14%
Other income 3,657 4,000 -9%
Operating revenues 14,602 14,052 4%
Other expenses 6,580 5,810 13%
Profit before taxation 6,352 6,304 1%
Profit after taxation 4,220 4,215 0%
EPS (Rs) 3.14 3.13
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Source: KSE notice