Karachi, March 20, 2024 – The National Bank of Pakistan (NBP) faced a setback as it lost a crucial petition filed in court regarding pension dues. The court ruling mandates NBP to disburse pensions to 11,500 retired employees, allocating Rs 60 billion for this purpose within a month.
The decision, announced during today’s court session, marks a significant development in the long-standing pension dispute. Analysts at Arif Habib Limited reported that the court dismissed NBP’s plea and ruled in favor of the retired employees, emphasizing the bank’s obligation to honor its pension commitments.
According to circulating media reports, NBP is expected to disburse approximately Rs 60 billion (pre-tax) to pensioners, despite the reported liability in the books standing at Rs 98.5 billion. While awaiting clarification on the agreed-upon amount, analysts have assessed the potential impact on earnings per share (EPS) and capital adequacy ratio (CAR) under different scenarios.
If NBP settles the amount at Rs 60 billion (after tax, Rs 30.6 billion net), the per-share negative impact on EPS is projected to be Rs 14. Alternatively, if the entire liability of Rs 98.5 billion (after tax, Rs 50.2 billion net) is settled, the per-share negative impact is estimated to be Rs 23. Despite the substantial pension liability, NBP’s CAR as of December 2023 stood at a comfortable 25.8%, exceeding the minimum requirement of 14%.
Even accounting for the full liability, the CAR is expected to remain comfortably above the minimum requirement, estimated at approximately 22.4%. However, if the reported settlement amount of Rs 60 billion (after tax, Rs 30.6 billion net) materializes, the impact on the CAR will be 23.8%.
Analysts cautioned that these figures are subject to change pending further clarification and updates from NBP. The ruling highlights the importance of adhering to pension commitments and underscores the financial implications for banks involved in similar disputes. NBP’s response to the ruling and its subsequent actions will be closely monitored by stakeholders as the bank navigates through this legal challenge.
