National Bank of Pakistan (NBP) has declared 21 per cent decline in after tax profit due to high incidence during first nine months (January – September) 2022.

According to unconsolidated financial results submitted to the Pakistan Stock Exchange (PSX), NBP announced after tax profit at Rs19.16 billion for nine months period ended September 30, 2022 as compared with Rs24.14 billion in the corresponding period of the last year.

The bank declared earnings per share (EPS) at Rs9.01 for the nine months period ended September 30, 2022 as compared with EPS Rs11.35 in the same period of the last year.

Board of Directors of National Bank of Pakistan met on October 28, 2022 and not recommended any cash dividend, bonus issue/ right share or any other entitlement.

Bank officials said that taxation charge for the period amounted to Rs29.2 billion as against Rs16.1 billion during nine months of year 2021. They said that the Finance Act, 2022 brought in certain changes, which apart from increase in the statutory and super tax rate, also had a retrospective impact mainly due to ADR being below 50 per cent with reference to prior year’s earnings and has increased the effective tax rate from 40 per cent for nine months of 2021 to 60.4 per cent for nine months of 2022.

During nine months period ended September 30, 2022, the bank generated a gross interest income (GII) of Rs332.2 billion as against Rs166.5 billion for the similar nine months period of 2021. The Rs165.7 billion increase in GII is 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 12.4 per cent as compared to 7 per cent during the same period last year.

Bank’s investments portfolio during nine months period ended September 30, 2022 averaged Rs2,427.5 billion (September 2021: Rs1,633.8 billion) and generated mark-up/interest income of Rs225.5 billion being Rs125.3 billion or 124.9 billion up against Rs100.3 billion for the corresponding period of last year.

This translates into average yield at 12.4 per cent (September 2021: 8.2 per cent). In 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 Rs126.9 billion (September 2021: Rs53.9 billion) generated a mark-up income of Rs10.8 billion (September 2021: Rs2.9 billion) at an improved yield of 11.3 per cent as compared to 7.1 per cent for September 2021.

For the nine months period ended September 30, 2021, the bank’s loan book averaged Rs1,341.9 billion and generated a mark-up income of Rs95.9 billion i.e. Rs32.5 billion or 51.4 per cent higher than Rs63.4 billion of the similar period last year. This significant growth was achieved through both, a volumetric growth, as well as the favorable Year on Year (YoY) rate variance. Pertinent to mention this high performance was achieved despite the fact that the bank carries a significant proportion of lower margin and non-performance public sector loans.

Likewise, on the back of higher average policy rate, the bank’s cost of funds for nine months period ended September 30, 2022 recorded a significant YoY increase and amounted to Rs251.6 billion as against Rs94.1 billion for corresponding nine month period of 2021.

The Rs159.5 billion or 167.4 per cent YoY increase is mainly recorded in cost of deposits that amounted to Rs141.9 billion as against Rs61.7 billion in the same period of the last year and the borrowings/repo costs by Rs75.8 billion to close at Rs101.5 billion. As compared to nine months ended September 2021, average non-remunerative current deposits increased impressively by Rs66.9 billion or 13.3 per cent to Rs569.6 billion.

Operating expenses of the bank for the period under review amounted to Rs54.8 billion which is 16.5 per cent higher YoY as compared to Rs47 billion of same period last year.