Corporate results: NBP’s earnings rise 42% in first half

Lower provisions, high capital gains lend support.

KARACHI:

National Bank of Pakistan (NBP) announced on Tuesday that its profit rose 41.9% in the first half of 2014, standing at Rs8.1 billion (earnings per share - EPS Rs3.8) compared to Rs5.7 billion (EPS Rs2.7) in the same six months of previous year.

The bank’s net interest income dipped 2.8% to Rs19.5 billion. However, the earnings got support from sharply reduced provisioning expenses and abnormally high capital gains, said Topline Securities in a research report.

In the first half, the bank provided Rs2 billion against non-performing loans (NPLs) compared to Rs6.5 billion in the corresponding period of previous year. Gains on sale of securities rose 64.2% from Rs2.8 billion to Rs4.6 billion.

This, along with an 8.2% higher fee income to Rs5.9 billion, took non-interest income to Rs15.5 billion, up 18.9%.



In the second quarter (April-June), NBP’s profit stood at Rs5 billion against first-quarter profit of Rs3.1 billion, up 58.5%.

During the quarter, net interest income increased 25.8% to Rs10.8 billion primarily on the back of a 12.6% increase in interest income to Rs28.4 billion.

However, major impetus came from a manifold increase in gains on sale of securities from Rs0.7 billion in the first quarter to Rs3.8 billion in the second quarter.

Bank Alfalah

Bank Alfalah recorded a rise of 34.3% in its profit that stood at Rs2.6 billion in the first half of 2014 compared to Rs1.9 billion in the corresponding period of previous year.

Its net interest income (NII) grew 21.7% to Rs9.6 billion. “Though banking spreads averaged 6.1% in 1H2014 against 6.3% in 1H2013, the NII got support from higher yield on the increasing Pakistan Investment Bond (PIB) portfolio of banks and rising credit growth,” said Topline Securities in another report.

Provisioning expense also dropped as the bank recorded the provisions against non-performing loans at Rs203 million (Rs483 million in 1H2013) while provisions for diminution in the value of investments remained at Rs24 million (Rs390 million in 1H2013).

Published in The Express Tribune, August 20^th, 2014.

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