KARACHI: The Board of Directors of National Bank of Pakistan “NBP” “the Bank” met on Wednesday to approve the condensed interim financial statements for the six months period ended June 30, 2022.
With volumetric growth in average earning assets coupled with positive rate variance, NBP recorded 66 percent growth in gross interest income that reached Rs 179.4 billion as against Rs 108.0 billion for the same period last year. In the increasing interest rate scenario, cost of funds for the period amounted to Rs 126.3 billion. Accordingly, net interest income closed at Rs 53.1 billion, depicting a 12.0 percent increase YoY.
Despite the challenging business environment and lacklustre performance of the stock market the Bank generated total non-fund income amounting to Rs 18.4 billion which is 2 percent higher YoY. Equity investment of the bank generated divided income of Rs 1.9 billion, 33 percent higher YoY.
Fee & commission income earned through branch banking operations stood at Rs 10.2 billion i.e. 16 percent higher YoY and reflective of the Bank’s widespread market outreach. As the Bank provides FX solution to large number of companies, its forex income for the period amounted to Rs 4.3 billion which is 61 percent higher YoY. Consequently, total income amounted to Rs 71.5 billion which is Rs 6.0 billion or 9.2 percent higher, YoY.
Reflecting the inflationary pressures and investment into its IT systems & infrastructure, operating expenses for the period amounted to Rs 35.8 billion. NPLs increased marginally by 2.7 percent to reach Rs 203.3 billion.
As the Bank is pursuing a prudent assets growth strategy, NPL ratio that stood at 15.6 percent in Jun’21 improved to 14.9 percent in Jun’22. Positively, provision charge for the period amounted to Rs 1.7 billion only i.e. Rs 5.0 billion or 74 percent lower than Rs 6.8 billion for H1’21.
In line with the SBP guidelines, NBP maintains adequate provisions against NPLs to buttress its capital base. With Rs 187.9 nillion of specific provisions, NPL coverage ratio stood strong at 92.4 percent.
The Bank’s pre-tax profit increase by 21 percent YoY and amounted to Rs 33.9 billion as against Rs 28.0 billion for H1’21. The Finance Act-2022 brought in certain changes in Corporate Tax, which apart from increase in the statutory and super tax rate, also had a retrospective impact with reference to prior year’s earnings attributable to investments in the federal government securities.
Consequently, effective tax rate increased from 39 percent in H1’21 to 64 percent for H1’22 and tax charge amounted to Rs 21.7 billion against Rs 11.0 billion for H1’21. Impact of the higher tax rate is reflected in the Q2’22 as total tax charge amounted to Rs 15.5 billion against Rs 6.2 billion for Q1’22. Resultantly, profit after tax for Q2’22 stood at Rs 2.3 billion as against Rs 9.8 billion of Q1’22 and profit after-tax for half year amounted to Rs 12.1 billion.
With a massive 33 percent growth, the bank has achieved Rs 5 trillion milestone in its balance sheet as its total assets reached Rs 5,119.8 billion from Rs 3,846.7 billion at the end of 2021. This makes NBP the largest Bank in Pakistan in terms of total assets.
While investment increased by 68 percent to reach Rs 3,251.0 billion, gross advances recorded 4.8 percent growth to Rs 1,367.3 billion. The bank maintains a strong funding and liquidity profile through a well-diversified funding portfolio.
As of June 30, 2022, total deposits amounted to Rs 3,198.6 billion. The bank’s efforts towards mobilising low-cost deposits have resulted in 13.5 percent growth in average non-remunerative current deposits. While CASA ratio stood at 83 percent, Liquidity Coverage and Net Stable Funding also remained high at 146 percent and 277 percent, respectively.
Capital Adequacy Ratio improved to 22.04 percent from 20.39 percent at the YE’21 depicting strong financial soundness of the Bank. The Bank enjoys highest credit ratings of AAA / A1+ categories for both long term and short term respectively as reaffirmed by both PACRA and VIS Credit Rating Company in June 2022.
During the last couple of years, the bank has pursued a major organizational transformation, product enhancement, digitalization and initiatives for promoting financial inclusion with a focus on commercial and rural segments. In parallel with its business growth initiatives, the Bank has continued to progress via remediation of legacy issues in the area of core banking system upgrade, international franchise, risk management, asset quality, operational effectiveness and HR.
NBP’s future strategy focuses on enhancing its service quality levels, diversifying its outreach through digitalization, and increasing its range of product and services. As the Nation’s bank, enhancing access to financial services to all remains a goal of the Bank since its creation in 1949.