National Bank of Pakistan (NBP) had an IDR well in excess of 50 percent not so long ago. It has now come down a bit - in the 40s, though still higher than peer average. That the NBP has not been as reluctant a lender, is down to it being a state-owned entity. High returns come with higher risks, and NBP has gain felt the pinch in form of high provisioning charges for the period ended September 2015.

The massive increase in provisioning charges for the period single-handedly wiped off an otherwise more than decent performance. Well placed sources attribute the surge to the provisions made for Tuwairqi Steel Mills - to the tune of close to 25 billion.

Not that the pre tax profit growth is not impressive, as the non mark-up income made up for the ground lost in provisioning.

The top line did not grow despite a fatter balance sheet. A considerable shift in asset composition coupled with more exposure in low risk, yet low-yielding government securities ensured a flat top line growth. The balance sheet numbers are not out yet - taking 1HCY15 numbers as proxy, the inclination towards government securities is pretty clear.

Thankfully, NBP has also found out that rationalising the deposit mix is the real deal in these times of thin spreads and low yields. The cost of deposit seems to have come down looking at the NIMs. The CASA ratio had improved to 75 percent by the end of 1HCY15. Though still lower than similar sized banks, NBP at least seems to be on the right track.

As always, the non mark-up income contributed heavily towards the bottom line - mainly in the form of gain on sale of securities as banks cashed on the opportunities on offer during the period. Another positive for NBP is its fast improving cost to income ratio as the state owned bank has made a conscious effort to keep a lid on administrative expenses - and the results thus far are encouraging.