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NBP profit declines 3 percent in Q1CY20

Business

May 22, 2020

KARACHI: National Bank of Pakistan (NBP) profit declined 3 percent to Rs4.138 billion for the quarter ended March 31, 2020, translating into earnings per share (EPS) of Rs1.94, a statement said on Thursday.

NBP earned Rs4.277 billion with EPS of Rs2.00 in the corresponding quarter last year. The bank did not announce any interim cash dividend for the quarter ended March 31, 2020, the statement added.

NII of the bank settled at Rs16.6 billion during the first quarter of 2020, increasing by seven percent year-on-year, while contracting by a significant nine percent quarter-on-quarter.

Arif Habib Limited in its research noted that the bank’s NFI declined two percent YoY as higher capital gains were countered by drastically lower dividend income. On a sequential basis NFI fell 22 percent QoQ, as the bank reported a decline in all its components with fee income falling 10 percent, dividend income falling 45 percent, forex income falling 55 percent and capital gains falling 15 percent, it said.

The bank continued to book heavy provisioning expenses of Rs4 billion during Q1CY20.

Operating expenses returned to normalised levels clocking in at Rs14.2 billion, up eight percent YoY, down 43 percent QoQ. Last quarter some HR one-off provisions had caused a massive surge in the operating expenses. Cost/income stands at 56 percent compared to 54 percent in the same period last year, and 85 percent last quarter.

Effective tax rate for Q1CY20 was 41 percent compared to 52 percent in the same period last year.

Fawad Basir from Topline Securities said, “Provisions increased by 79 percent YoY, however sequential performance fared slightly better as provision decline by 19 percent QoQ.” SPL posts Rs4.33bln loss

Shell Pakistan Limited (SPL) said it had incurred an after tax loss of Rs4.332 billion in the first quarter of calendar year 2020, compared to a profit of Rs257 million in the same period last year, due to a global oil market crash amid COVID-19 pandemic.

This result translates into a loss per share of Rs40.48 against the earnings per share of Rs2.40 reported in the first quarter of 2019.

The oil marketing company in a statement attributed the losses to a decline in sales volume that eroded its net revenues by 8 percent.

“The quarter has been greatly affected by the impact of the unprecedented coronavirus pandemic,” the company said.

The pandemic led to a global economic downturn resulting in crude oil prices sharply declining from $66/barrel in January 2020 to $22/barrel in March 2020 decreasing by more than 60 percent, primarily because of a plunge in global oil demand.

This sharp decrease in oil prices resulted in exceptionally high inventory losses during the first quarter of 2020 which in turn significantly impacted financial performance.

BoP profit falls 21pc

Bank of Punjab (BOP) said its profit for the quarter ended March 31, 2020 fell 21 percent to Rs1.490 billion, translating into earning per share (EPS) of Rs0.56.

The bank had earned Rs1.898 billion with an EPS of Rs0.72 in the corresponding period last year.

Brokerage Arif Habib Limited in a research note said, the bank’s net interest income settled at Rs5.9 billion, down 7 percent YoY and 17 percent QoQ, while its interest expense saw a marked uptick during the quarter, accelerating 88 percent YoY and 10 percent QoQ with interest earned jumping 50 percent YoY and 2 percent QoQ.

“This quarterly decline in net interest income is the first for the bank since 2QCY18,” the brokerage said.

It further said the bank’s non-funded income increased 145 percent YoY and 76 percent QoQ during 1QCY20 primarily led by hefty capital gains of Rs1 billion during the quarter, while fee income rose 11 percent YoY, it was down 8 percent QoQ.

Moreover, the bank saw a significant rise in its operational expenses by 31 percent YoY and 5 percent QoQ.