Karachi, October 25, 2023 – The National Bank of Pakistan (NBP) has reported a remarkable after-tax profit of PKR 12.3 billion for the third quarter of 2023, demonstrating an astonishing 76% year-on-year (YoY) increase.
However, the quarterly figures, compared to the previous quarter, were down by 22%. The bank attributed this fluctuation to a combination of soaring net interest income and a reduction in non-funded income, counteracted by substantial provisioning.
Rise in Net Interest Income Bolsters Earnings
NBP’s interest income for the third quarter of 2023 stood at a staggering PKR 296 billion, marking an impressive 94% YoY increase and a notable 24% quarter-on-quarter (QoQ) rise. In contrast, interest expenses increased by 99% YoY and 25% QoQ. This led to a net interest income of PKR 47.6 billion, reflecting a remarkable 73% YoY growth and a significant 17% QoQ increase. The bank’s net interest income for the first nine months of 2023 reached PKR 121 billion, representing a substantial 50% YoY rise.
Decline in Non-Interest Income
Non-interest income, however, experienced a decline during the third quarter, falling by 15% YoY and a notable 45% QoQ, reaching a total of PKR 6.8 billion. The cumulative non-interest income for the first nine months of 2023 amounted to PKR 27.7 billion, showing only a marginal 1% YoY increase compared to PKR 27.4 billion in the same period last year. This decline in non-interest income was primarily attributed to a significant drop in foreign exchange (FX) income, which decreased by 52% YoY.
Substantial Provisioning Impact
During the third quarter of 2023, NBP reported a substantial provisioning charge of PKR 9.2 billion, a stark contrast to the reversal of PKR 329 million reported in the second quarter of 2023. Consequently, the total provisioning charge for the first nine months of 2023 reached PKR 9.6 billion, marking a substantial 169% YoY increase compared to PKR 3.6 billion during the same period in 2022.
Operational Expenses and Effective Tax Rate
NBP’s operational expenses (OPEX) saw a 13% YoY increase in the third quarter of 2023 but were down by 7% QoQ, amounting to PKR 21.8 billion. This contributed to a favorable cost-to-income ratio of 40% in the third quarter, compared to 54.5% in the same period last year.
The effective tax rate during the third quarter of 2023 stood at 47%, marking a slight decrease from the 52% reported during the same period last year.
NBP’s performance in the third quarter of 2023 reflects a robust and growing institution. The bank’s impressive net interest income and a decline in non-interest income, coupled with substantial provisioning, have played a pivotal role in shaping its financial landscape. With continued resilience and adaptability, NBP remains a significant player in Pakistan’s banking sector, poised for future growth and success.
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