Islamabad August 17 2022: National Bank of Pakistan profitability drops 72 percent to PKR 2.5 Bn in quarter ended June 2022 when compared with profitability of PKR 9.2 Bn in the same period last year, according to banks filling to the exchange.
The share price of the bank hit lower circuit as it drops PKR 2.34 or 7.0 percent after the announcement as bank has not announced any cash dividend for its shareholders.
For the three months period under review, your Bank recorded Gross Interest Income ‘GII’ of PKR 100.2 Bn as against PKR 59.6 Bn for the corresponding three months period of 2021. The PKR 41.6 Bn increase in GII was achieved through volumetric growth in average interests bearing assets coupled with the impact of higher average policy rate during Q2’22.
Likewise, on the back of higher average policy rate, the Bank’s cost of funds for Q2’22 also increased from PKR 33.7 Bn in Q2’21 to PKR 72.8 Bn for Q2’22. This 118% increase of PKR 39.2 Bn is mainly contributed by an increase in cost of Deposits and the borrowings/repo cost.
Consequently, the Net Interest Income ‘NII’ for the period under review closed at PR 27.4 Bn, depicting a 5.8% increase against PKR 25.8 Bn of Q1’21.
Non-Fund Income ‘NFI’ for the Q2’22 recorded a slight increase to close at PKR 10.8 Bn which is higher by PKR 0.7 Bn or 6.7% against PKR 10.1 Bn of Q2’21. Fee & commission income recorded a 8.5% growth YoY to close at PKR 5.9 Bn (Q2’21:PKR 5.4 Bn), capital gains, on the other hand, dropped by PKR 0.6 Bn to close at PKR 953 Mn only (Q2’21:PKR 1.5 Bn). Foreign exchange income recorded a 32.8% growth YoY to close at PKR 2.4 Bn (Q2’21:PKR 1.8 Bn) due to volatility in the forex market.
Operating expenses of the Bank for the period under review amounted to PKR 19.4 Bn which is 16.8% up YoY as compared to PKR 16.6 Bn of SPLY.
The Bank prudently identifies impairment in its assets portfolio under the expected credit loss model and maintains a robust level of provisions as per the applicable regulatory requirements. The Bank’s financial results, while these show strong increase in capital generation capacity, also demonstrate the Bank’s resilience and ability to build necessary cushions against future credit shocks.
For the three months period under review, net provision charge amounted to PKR 589 Mn i.e. significantly lower by 84.9% or PKR 3.3 Bn as compared to PKR 3.9 Bn for the corresponding three months period of 2021.
Tax expense amounted to PKR 15.6 Bn which is 155% or PKR 9.5 Bn as compared to PKR 6.1 Bn for the corresponding three months period of 2021. Despite organic revenue growth and lower provision expense, imposition of super tax on current year earnings and increased tax rates for Banks weighed on the NBP profitability.
Accordingly, profit after-tax for the three months period ended June 30, 2022 amounted to PKR 2.5 Bn i.e. PKR 6.7 Bn or 27.1% lower than PKR 9.2 Bn for Q2’21. This translates into Earnings per Share of PKR 1.18 as compared to Rs. 4.31 for the corresponding Q’2 period of 2021.
