Balance sheet growth of 27pc, 8.4pc of net assets: Nine month period: NBP shows Rs24.1bn PAT

KARACHI: The Board of Directors of the National Bank of Pakistan (NBP) met to review the financial performance of the bank and approved the condensed interim financial statements for the nine-month period ending September 30, 2021.

The Board observed that despite the economic challenges associated with the pandemic, the Bank maintained its strong performance momentum on all business fronts. In pursuit of its vision of being the country’s leading bank enabling sustainable growth and inclusive development, the Bank has made significant progress in organizational transformation, product digitization and initiatives to promote financial inclusion by focusing on commercial and rural segments.

The Bank reported after-tax profit for the nine-month period ending September 30, 2021 of PKR 24.1 billion, or PKR 11.35 per share, on total revenue of PKR 99.5 billion . This is compared to after-tax profit of PKR 26.1 billion, or PKR 12.28 per share, on total income of PKR 107.6 billion for the corresponding nine-month period of 2020. Notably, after substantial additional provisions of approximately 12.2 billion PKR supported. 2021.

In line with industry-wide margin cuts, the Bank’s revenues declined 7.5% to close at PKR 99.5 billion (September 20: PKR 107.6 billion), mainly reflecting the impact the fall in the key rate and the normalization of the return on investments. The Bank recorded net interest income of PKR 72.4 billion, driven by PKR 240 billion growth in the middle income portfolio. While the bank’s gross margins / interest income closed at PKR 166.5 billion (19.2% year-on-year), interest expense / margins also fell 25.4% to 94.1 billion PKR. Despite moderate business activity during most of the period under review, the Bank’s non-margin / interest-free earnings remained high at PKR 27.1 billion (September 20: PKR 27.7 billion). As a result, the Bank’s total turnover closed at PKR 99.5 billion (September 20: PKR 107.6 billion).

Despite inflationary pressures and higher operating costs (as the Bank continues to provide uninterrupted services during the pandemic, contributing to Pakistan’s economic growth and development), administrative expenses have remained well under control and recorded a marginal increase of 4.5% year-on-year to close at PKR 47.0 billion. This translates into a cost / income ratio of 47.3%, up slightly from 41.8% of the 9M’20. During the period, the Bank’s NPLs increased by 17.7% to close at PKR 201.7 billion (December 20: PKR 171.3 billion). To make its balance sheet more resilient under the current circumstances, the Bank established a provision charge of PKR 12.2 billion during the period.

On the balance sheet side, the NBP has one of the most important balance sheets in the sector, which further increased by 27.1% to reach PKR 3,800 billion, during the nine months of 2021, against PKR 3,000 billion. in early 2021. The Bank’s balance sheet grew on the back of a stable expansion of the deposit base, thanks to money market borrowing. The Bank’s gross loans and advances amounted to PKR 1,207.7 billion, an increase of 4.1% over year-end 2020 levels.

The bulk of the Bank’s total funding comes from deposits from major clients which accounted for 87.2 percent (PKR 2,224.6 billion) of the Bank’s total deposits which amounted to PKR 2,551.6 billion. . Compared to the level of December 31, 2020, customer deposits increased by 10.1% or PKR 204.0 billion.

The Bank’s capital base continues to be strengthened as the total capital adequacy ratio has improved to 22.20 percent (December 20: 19.78 percent). Capital strength is evident from the ratio of the Bank’s Common Equity Tier-1 (CET1) capital to total risk-weighted assets of 16.70% (December 20: 14.99 %) against the 9.50% requirement. The Bank’s capitalization translates into a healthy leverage ratio of 3.6%, well above the regulatory limit of 3.0%. This capital position allows the Bank to absorb shocks for the foreseeable future and take advantage of emerging business opportunities to create value for its shareholders. The Bank’s liquidity ratio and net stable funding ratio improved to 170% and 270%, respectively. With the continued generation of healthy value for its shareholders, net assets at the end of September 21 stood at PKR 290.0 billion, resulting in a break-up value per share of Rs 136.3, or 40% more than Rs 97.2 at the start of 2019.

The Bank enjoys the highest local credit ratings of AAA / A1 + long term and short term categories respectively, as reaffirmed by both PACRA and VIS Credit Rating Company.

NBP Islamic Bank operates a network of over 200 dedicated branches across the country. Islamic Banking continues to focus on commercial enterprises and SMEs by expanding shopping malls to facilitate service to these segments.

During the third quarter of 2021, NBP won several international and local publications / platform awards. These include, among others, the award for Best Bank for Agriculture, Corporate and Investment Bank of the Year – Pakistan, Corporate Client Initiative of the Year – Pakistan, l Debt Deal of the Year – Pakistan, Project Infrastructure Finance Deal of the Year – Pakistan, Finance House of the Year Project for the Year, Best Trade Finance Bank in Pakistan for 2021 and Best Corporate Reporting Award 2021.

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