CY12 didn appear to be as flattering to the banking sector as the previous year. With declining interest rates and eroding core business, the big five banks collectively managed to boast a skimpy jump of seven percent YoY in their top line despite a healthy 24 percent increase in total assets. This compares adversely with over 17 percent growth seen in the top line of the toppers in CY11, giving an obvious feeler that the money making path would be quite thorny for the bankers in the time to come.
Bank-wise break-up reveals that the mainstream growth came on the heels of HBL which posted a handsome 18 percent boost in its top line followed by UBL and NBP whose top line growth hovers around five percent. ABL, as against its group mates, faced the headwinds greatly touting a step-back of four percent in its top line in CY12.
With CASA of Big five showing no significant progress over the year, increase in minimum rate on fixed deposits took its toll on the NII which shriveled by six percent YoY. However, decline in NII was compensated by a humungous drop of 33 percent in the collective provisioning charges of the mighty five.
The heightened credit appetite on the government front and the banks desire to keep a check on their infection ratio led to an increased exposure in government securities during the period. Resultantly, the IDR of the Big five bounced from 46 percent in CY11 to 54 percent in CY12. However, ADR shaved off two percentage points to clock in at 51 percent in CY12.
Bank-wise analysis of investments and advances pushes MCB and NBP poles apart, with MCB having an IDR of 74 percent - highest among the Big five, while NBP, as-usual went against the bandwagon, touting the lowest IDR of 33 percent. This brings NBP in limelight among Big five commercial banks, as it managed to focus on its core business of lending to the private sector amid difficult times. However, unfortunately, this also rendered NBP incapable of posting a growth in its bottom line in CY12, as against its four buddies.
The increase in administrative expenses during the period was counterbalanced by a massive rise of 29 percent in non-operating income. Bank-wise comparison in terms of growth in non-markup income divulges that the award for this category was bagged by ABL, posting an enormous growth of 96 percent in its non-operating earnings in CY11.
The collective impact of the aforementioned upbeat and downbeat factors culminated into a bottom line growth of eight percent YoY, against last years stunning bottom line growth of 20 percent. However, bearing in mind the holdups that propped up in CY12 in the form of 250 bps dive in the policy rate coupled with the imposition of minimum six percent rate of PLS accounts and lack of appetite from the private sector owing to political unrest and power shortages, the eight percent bottom-line growth is no less than a divine-blessing.
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BIG 5 BANKS COMBINED CONSOLIDATED P&L
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(Rs mn) CY12 CY11 Change %
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Markup Earned 411,234 385,958 7%
Markup Expenses 209,986 172,383 22%
Net Markup Income 201,248 213,575 -6%
Provisioning 20,162 30,153 -33%
Net Markup Income after provisions 181,086 183,422 -1%
Other Income 81,746 63,156 29%
Operating Revenues 262,832 246,578 7%
Other Expenses 129,538 115,615 12%
Share of Income/(loss) of associates 2,694 (297) -1008%
Profit Before Taxation 135,988 130,666 4%
Taxation 44,348 46,163 -4%
Profit After Taxation 91,640 84,504 8%
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Source: Company Accounts
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BIG 5 BANKS PERFORMANCE SNAPSHOT
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CY12 CY11
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Infection Ratio 12% 14%
Coverage Ratio 82% 80%
IDR 54% 46%
ADR 51% 53%
CASA 67% 67%
ROA 2% 2%
ROE 17% 18%
Efficiency Ratio 49% 47%
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Source: Company Accounts
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