April, 28(E. A Report) —National Bank of Pakistan (NBP) operational expenses have reached to 21.2 billion in first quarter, which are 26.3% higher as compared to Rs. 16.8 billion last year.
According to Bank’s filing, in addition to operating expenses of the Bank, “Other” operating expenses increased to Rs. 3.2 billion depicting a 26.1% hike for the period under review.
According to Bank’s filing, HR cost that constitutes around 67.7% of the total operating expenses, amounted to Rs. 14.3 billion against Rs. 11.6 billion in March last year. This increase reflects the impact of annual pay increase, charge for defined benefit plans and other HR related provisions. While property related expenses amounted to Rs. 2.4 billion against Rs.2.0 billion of last year.
Non?Fund Income ‘NFI’ recorded a decrease to close at Rs. 7.5 billion, which is Rs. 0.6 billion or 7.3% lower than Rs. 8.1 billion of Mar’22, said mainly due to drop in the FX income.
While fee & commission income recorded a 3.0% decrease year on to close at Rs. 4.5 billion against Rs.7 billion last year.
Thanks to prevalent higher average policy rate, National Bank of Pakistan (NBP) earned profit of Rs.10.7 billion for first quarter against last year profit of Rs. 9.8 billion with increasing operational cost.
National Bank generated a Gross Interest Income ‘GII’ of Rs. 192.4 Bn as against Rs 79.2 billion for the same three months period of 2022. Where Rs. 113.2 billion increase in GII achieved through a robust volumetric growth in average interests earning assets coupled with the impact of higher average policy rate during this period that stood at 17.7% as compared to 9.75% during the same period last year.
Bank’s investments portfolio averaged Rs 3,519.2 billion against last year quarter of Rs. 1,984.6 billion by generating mark?up/interest income of Rs.146.2 billion being Rs. 95.8 billion or 190.2% up against Rs. 50.4 billion for the corresponding Mar’22.
This translates into average yield at 16.85% against 10.29% previously. the higher policy rate environment, the maturity profile of the Bank’s investment book is skewed towards the shorter duration securities under available?for?sale category.
Similarly, placements, that averaged Rs. 66.2 billion against Rs. 110.6 billion of last year by generating a mark?up income of Rs 2.7 billion which was Rs. 2.7 billion last year at a higher yield of 16.6% as compared to 9.77% for Mar’22.
However, Bank Chairman Ashraf Mahmood Wathra says, NBP delivered strong Bank financial performance for the three months period ended March 31, 2023. “These results depict the resilience of the Bank’s business model, effectiveness of the management’s strategies and the efforts of our staff” says Wathra
According to the statement for the three?months period, the Bank’s loan book averaged Rs.1,411.4 billion and generated a mark?up income of Rs. 43.5 billion like as Rs. 17.3 billion or 66.2% higher than Rs. 26.2 billion for the similar period last year.
This significant growth was achieved through both, a volumetric growth, as well as the favourable YoY rate variance.
Likewise, on the back of higher average policy rate, the Bank’s cost of funds for Mar’23 recorded a significant year on increase and amounted to Rs. 159.9 billion as against Rs. 53.4 billion for corresponding period of 2022. Rs. 106.5 billion or 199.3% YoY increase is reporter as mainly recorded in cost of Deposits that amounted to Rs. 69.7 billion, which previously was Rs. 36.3 billion and the borrowings/repo costs by Rs. 73.8 billion to close at Rs. 88.6 billion.
Consequently, the Net Interest Income ‘NII’ for the period under review closed at Rs. 32.5 billion, depicting a 26.1% increase against Rs. 25.8 billion of Mar’22.
The FX income closed lower by 49.8% to close at Rs. 1.1 Bn as against Rs. 2.1 billion for Mar’22 as the forex market remained more stabilised during the period under review.
The Bank’s equity investment portfolio yielded dividend income of Rs. 1.0 billion, which is Rs. 0.12 billion or 13.1% higher YoY. Whereas, capital gains increased significantly by Rs. 0.26 billion or 264.1% to close at Rs. 0.36 billion, which previously was PKR 0.1 billion during same period.
Going forward, the bank is expecting NFI to rebound as the stock market is expected to show stability.
IT related expenses stood at Rs. 1.2 billion comparing Rs.0.6 billion of last year.
The filing says, Bank is currently investing significantly to improve & strengthen its core banking applications and related IT infrastructure.
Provision charge amounted to Rs. 0.68 billion i.e. significantly lower by 36.0% or Rs. 0.38 billion as compared to Rs. 1.1 billion for the corresponding three months period of 2022. Key contributor towards this drop were the loans & advances that recorded a net reversal of Rs. 68.4million as against a charge of Rs. 1.0 billion for the corresponding 3M period of 2022.
However, provision against diminution in value of investments recorded a YoY increase of Rs. 710.0million and amounted to Rs. 724.5 million as against Rs. 14.5 million in the comparative period.
Specific and General provisions held against NPLs stood at Rs. 204.5 billion, which was Rs. 190.7 billion in December and Rs. 16.9 billion Rs. 17.3 billion December, respectively.
Thus, provision coverage at March 31, 2023 stood at 81.2%.
However, excluding certain NPL that is secured through a sovereign guarantee issued by the Government of Pakistan, the NPL coverage stands at 93%.
Taxation charge for the period amounted to Rs. 7.5 billion as against Rs. 6.2 billion for March last year. Consequently, profit after?tax for the three months period ended March 31, 2023 stood at Rs. 10.7 billion i.e. Rs. 0.85 billion or 8.7% higher than Rs. 9.8 billion for Mar’22, translates into Earnings per Share of Rs. 5.02 as compared to Rs. 4.62 for Mar’22
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