Corporate results: Stellar results propel NBP’s stock to highest in two years
Bank announces Rs7 per share cash payout and a 15% bonus issue.
NBP’s profit for 2012 clocked in at Rs16.89 billion, down 5% from previous year’s profit of Rs17.73 billion.
KARACHI:
Despite tighter banking spreads throughout 2012, the National Bank of Pakistan (NBP) managed to report stellar profits on Monday pushing the company’s stock price to highest in two years.
On a consolidated basis, NBP’s profit for 2012 clocked in at Rs16.89 billion, down 5% from previous year’s profit of Rs17.73 billion, according to a notice sent to the Karachi Stock Exchange. The bank also announced a final cash payout of Rs7 per share as well as a surprise 15% bonus share issue.
The bonus issue came as a surprise because the company had enough existing paid-up capital, standing at Rs18.5 billion, versus a minimum capital requirement of Rs10 billion for the banking industry.
During Monday’s trading session at the Karachi Stock Exchange, the bank’s share prices gained Rs1.35 to close at Rs54.74 – the highest in two years.
Following a 250 basis points decline in interest rates in the last six months of 2012 and a 100 basis points increase in minimum rate on saving deposits, resulting in a hefty decline in average banking spreads by 61 basis points in the year, NBP’s net interest income declined 6% to Rs44.57 billion. (A hundred basis points equal one per cent.)
NBP’s asset quality has witnessed improvement despite growth of 15% in provisioning towards non-performing loans during the year. The increase in provisioning expenses towards liabilities was offset by a considerable drop in provisioning for investments from Rs3 billion last year to just Rs0.864 billion, resulting in a 14% decrease in total provisioning expenses to Rs8 billion.
Moreover, NBP’s posted a strong growth of 26% in non-interest income driven primarily by fee, dividend and capital gains to Rs24.8 billion in 2012. Fee, commission and brokerage income stood at Rs11.12 billion, dividend income showed growth of 31% to Rs2.08 billion, income from dealing in foreign currencies grew to Rs3.8 billion. Additionally, gain on sale and redemption of securities grew 35% and NBP’s share of profits from associates jumped twentyfold to Rs1.855 billion. However, the 19% increase in non-interest expenses to Rs24.1 billion diluted the effect of growth in NBP’s non-core earnings and the bottom-line in general.
That being said, NBP held Rs20.4 billion as unrealised gains as of September 30, 2012, out of which Rs5 billion unrealised gains pertained to quoted shares/mutual funds while Rs3 billion pertained to Federal Government securities, according to Shajar Capital.
Published in The Express Tribune, February 26th, 2013.
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Despite tighter banking spreads throughout 2012, the National Bank of Pakistan (NBP) managed to report stellar profits on Monday pushing the company’s stock price to highest in two years.
On a consolidated basis, NBP’s profit for 2012 clocked in at Rs16.89 billion, down 5% from previous year’s profit of Rs17.73 billion, according to a notice sent to the Karachi Stock Exchange. The bank also announced a final cash payout of Rs7 per share as well as a surprise 15% bonus share issue.
The bonus issue came as a surprise because the company had enough existing paid-up capital, standing at Rs18.5 billion, versus a minimum capital requirement of Rs10 billion for the banking industry.
During Monday’s trading session at the Karachi Stock Exchange, the bank’s share prices gained Rs1.35 to close at Rs54.74 – the highest in two years.
Following a 250 basis points decline in interest rates in the last six months of 2012 and a 100 basis points increase in minimum rate on saving deposits, resulting in a hefty decline in average banking spreads by 61 basis points in the year, NBP’s net interest income declined 6% to Rs44.57 billion. (A hundred basis points equal one per cent.)
NBP’s asset quality has witnessed improvement despite growth of 15% in provisioning towards non-performing loans during the year. The increase in provisioning expenses towards liabilities was offset by a considerable drop in provisioning for investments from Rs3 billion last year to just Rs0.864 billion, resulting in a 14% decrease in total provisioning expenses to Rs8 billion.
Moreover, NBP’s posted a strong growth of 26% in non-interest income driven primarily by fee, dividend and capital gains to Rs24.8 billion in 2012. Fee, commission and brokerage income stood at Rs11.12 billion, dividend income showed growth of 31% to Rs2.08 billion, income from dealing in foreign currencies grew to Rs3.8 billion. Additionally, gain on sale and redemption of securities grew 35% and NBP’s share of profits from associates jumped twentyfold to Rs1.855 billion. However, the 19% increase in non-interest expenses to Rs24.1 billion diluted the effect of growth in NBP’s non-core earnings and the bottom-line in general.
That being said, NBP held Rs20.4 billion as unrealised gains as of September 30, 2012, out of which Rs5 billion unrealised gains pertained to quoted shares/mutual funds while Rs3 billion pertained to Federal Government securities, according to Shajar Capital.
Published in The Express Tribune, February 26th, 2013.
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