National Bank net profit jumps 24.5 per cent

National Bank of Pakistan (NBP) announced a lower-than-expected net profit of Rs7.82 billion for January to June, a jump of 24.5 per cent compared with last year.

Stable interest margins amid higher Karachi Inter-bank Offered Rate (Kibor), decline in provisions for non-performing loans and asset growth were the key to the upward trend, analysts said.

Net interest income rose 24.29 per cent to Rs20.74 billion during the first half of this year against Rs18.98 billion posted last year, according to the unconsolidated figures sent to the Karachi Stock Exchange on Tuesday.

The net profit missed the consensus forecast of four research firms by eight per cent.

Earnings remained under pressure with the rising operating expenditures. Operating expenditures of the country’s largest bank by asset base rose 21 per cent to Rs12.9 billion against Rs10.7 billion posted in the same period last year.

The company did not announce any cash dividend along with the result.

Interest income grew by 16.6 per cent to Rs43 billion primarily on the back of an estimated increase in average earnings from assets as lending rates are expected to remain comparatively stable.

Provisions against non-performing loans dropped significantly by 43 per cent to Rs2.8 billion against last year’s Rs5.06 billion.

This declining trend in provisions is expected to continue for the rest of the year, strengthening NBP’s profitability, according to Elixir Securities analyst Hifza Zia.

Administrative expenses surged 21 per cent on yearly basis to Rs12.8 billion from last year’s Rs9.99 billion owing to rising personnel cost.

Non interest income jumped 19 per cent on the back of a 9.6 per cent increase in fee, commission and brokerage income.

NBP continued to outperform the market in asset growth through higher lending and heavy inclination towards government securities, according to BMA Capital analyst Abdul Shakur.

Published in The Express Tribune, August 25^th, 2010.