Corporate results: Banking sector posts mixed results

HBL increases profits as NBP sees income fall.

KARACHI:

HBL Pakistan released its financial results for the first nine months of calendar year 2013, with profit after tax reported at Rs16.7 billion, compared to Rs17.4 billion earned in the corresponding period last year, a mere 4% drop on a consolidated basis considering the fall in banking spreads throughout the industry.

Earnings per share for the bank were recorded at Rs12.43 for the nine month period, down 4% from Rs12.92 in the previous year. The board of directors issued a dividend payment of Rs2 per share.

Net Interest Income (NII) for the nine month period clocked in at Rs40.4 billion, down 7% from Rs43.6 billion in the previous year.

The bank was able to bring down provisions for non-performing loans to Rs1.17 billion, compared with Rs4.18 billion in the year-ago period, a 67% drop.

Net non mark-up/interest income rose to Rs12.8 billion from Rs11.5 billion in the previous year, an 11% increase contributed to mainly from fee, commission and brokerage income which clocked in at Rs5.7 billion (up from Rs4.6 billion), and sale of securities which amounted to Rs1.58 billion (up from Rs753 million).



Administrative expenses also rose to Rs26.7 billion from Rs22.8 billion in the previous year, bringing total non-markup expenses to Rs27.1 billion, up 16% from Rs23.4 billion.

National Bank of Pakistan

National Bank of Pakistan announced its financial results for the first nine months of calendar year 2013, showing an after-tax profit of Rs7.2 billion, down 46% from Rs13.4 billion for the corresponding period in the previous year on a consolidated basis, resulting in earnings per share of Rs3.41 compared to Rs6.34 previously.

The board of directors decided against paying a dividend, which coupled with the disappointing result led to a drop of Rs2.48 in the stock prices on the Karachi Stock Exchange on Friday.

The massive drop in profits came mainly from reduced Net Interest Income (NII), which stood at Rs16.9 billion compared to Rs26.4 billion in the previous year, a 36% drop on a consolidated
basis. The bank saw its provisions against loans rise from Rs4.5 billion in the previous year to Rs12.1 billion.

The fall in NII comes as banking spreads shrunk across the board this quarter as the State Bank, after an increase in interest rates, announced an unexpected rise in deposit rates, which results in an increase in cost for banks. In this scenario, most banks have relied on non-interest income to boost revenues. According to Topline Securities, low banking spread scenarios averaged 6.26% in the nine month period compared to 7.14% in the corresponding period of last year.

Total non-mark up income witnessed some gains, increasing from Rs17 billion in the previous year to Rs19.5 billion in the reporting year, mainly through gains in fees, commission and brokerage incomes and higher capital gains. However total non-markup/interest expenses also rose from Rs24.5 billion to Rs27.3 billion.

Published in The Express Tribune, October 26^th, 2013.

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