If you’re a Pakistani bank, you have done a reasonable job posting improved profits over previous year. The Bank of Khyber (BoK) did just that. It was not a mind-blowing increase in top line or bottom line, but it was satisfactory, given the challenging environment that prevailed for much of CY13.
With detailed accounts unavailable yet, one could take a cue from the 9M CY13 numbers, which seemed to be moving in the right direction. A positive top line growth, and more impressively improved spreads, speaks of BoK’s improved earnings assets’ composition. BoK’s ADR had improved to 49 percent as at September 30, 2013, from nearly 44 percent earlier.
BoK also seems to be on a drive to improve its deposit mix, with a focus on low-cost deposits. The improvement is evident in significant addition of current accounts in the mix, which is becoming imperative for banks in today’s world where deposit rates are pegged with discount rate.
There is encouraging progress on the NPLs front as well, with the infection ratio having improved by 400bps as at September 20, 2013, with a much improved coverage. A sizeable reduction in provisioning expense aided the net interest income.
The non-core income failed to live up to expectations, registering a decline of 29 percent, chiefly due to nearly a one-third reduction in dividend income. BoK’s detailed accounts should provide better insights about the bank’s future line of action, but, if the P&L numbers are anything to go by, the ADR is expected to have improved even further, with a much better CASA at the end of CY13.

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The Bank of Khyber
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Rs (mn)                               CY12      CY13     chg
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Markup Earned                        7,205     7,407      3%
Markup Expensed                      4,611     4,337     -6%
Net Markup Income                    2,594     3,071     18%
Provisioning/(Reversal)                178        82    -54%
Net Markup Income after provision    2,416     2,989     24%
Non Mark-up/Interest Income            976       692    -29%
Non Mark-up/Interest Expenses        1,820     2,011     11%
Profit Before Taxation               1,572     1,669      6%
Taxation                               494       515      4%
Profit After Taxation                1,078     1,154      7%
EPS (Rs)                              1.08      1.16
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