NBP’s full-year profit surges 84pc to Rs30.58bln

KARACHI: National Bank of Pakistan (NBP) on Wednesday said its net profit for the year ended December 31, 2020 jumped 83.7 to Rs30.58 billion (EPS: Rs14.33), from Rs16.64 billion (EPS: Rs7.79) recorded in 2019, mainly owing to its post-crisis recovery strategy.

The bank did not announce any payout along with the results, which was not taken well by the stocks market and it slipped 5.1 percent during the trade on Wednesday.

The bank in a statement said despite the challenging times, the NBP recorded highest ever after tax profit in its history.

“Gross mark-up/interest income closed 7.7 percent higher year-on-year at Rs257.81 billion (2019: Rs239.48 billion); whereas the interest/mark-up expense amounted to Rs153.66 billion, of which Rs103.38 billion or 67.3 percent was paid to the depositors,” the statement said.

Despite reduced economic activity during the year, the bank succeeded in maintaining its non-mark-up/non-interest earning stream at Rs36.08 billion (2019: Rs36.20 billion). Accordingly, total revenue of the Bank closed 29.7 percent up year-on-year at Rs140.23 billion (2019: Rs108.11 billion).

As the operating and other expenses dropped by 4.2 percent down year-on-year by closing at Rs63.11 billion, the cost-to-income ratio improved from 60.9 percent in 2019 to 45.0 percent in 2020.

Profit before provision closed 82.5 percent up at PKR 77.12 billion (2019: Rs42.25 billion).

“The bank is more vigilantly monitoring its credit portfolio by moving from incurred to expected credit loss approach,” it said in the statement.

Net interest income of the bank settled at Rs104.37 billion during 2020, increasing by an impressive 45 percent compared with Rs72.15 billion in 2019.

“Total non-interest income of the bank showed no major change as higher capital gain (265 percent) was countered by lower fee income (-4.5 percent), dividend income (-40 percent), foreign exchange income (-32 percent) and 32 percent lower other income,” an analyst at Arif Habib Limited said.

The bank booked a significant general provisioning of Rs22 billion in CY20 to create a buffer against any possible deterioration on the asset quality, going forward, the analyst added.

“The bank is also prepared for IFRS-9 that is expected to be implemented this year. They expect further stress on the financials with its implementation,” the analyst said.

According to management, bank skipped a dividend this year in order to be prepared to incur the pension expense. The management also hinted at a possible interim dividend contingent on financial performance, which is conditional upon the review of central bank’s mandate that is due in this regard. The bank said its end of year total assets closed at Rs3,008.53 billion, 3.7 percent lower than 2019, which it attributed to a reduction of Rs333.22 billion in the money market borrowings in line with our prudent funding & liquidity strategy.

Furthermore capital and reserves stood at Rs267.56 billion i.e. Rs34.9 billion were 15.0 percent up from Rs232.62 billion on December 31, 2019.

The bank said it was executing a post-crisis recovery strategy on how to continue playing its systemically important role in economy and serve its customers, while also maintaining a strong and resilient balance sheet to deliver performance for shareholders.

OGDC’s quarterly profit falls 24pc

Oil and Gas Development Company’s (OGDC) said its net profit for the quarter ended December 31, 2020 fell 23.8 percent to Rs18.88 billion (EPS: Rs4.39) from Rs24.78 billion (EPS: Rs5.76) earned in the same quarter of the previous year.

“The earnings are lower than our expectations, mainly because of 87 percent drop in other income,” said Saad Hanif, an anslyst at Insight Securities.

The company also declared a cash dividend of Rs1.6/share, in addition to interim dividend of Rs2.0/share already paid to shareholders.

Sales revenue during the period declined 14.8 percent to Rs54.6 billion in the quarter under review as compared with Rs64.19 billion in the same period last year.

“Decline in revenues is attributable to 5.0 percent drop in oil and gas production each, 33 percent fall in oil prices,” a report issued by Arif Habib Limited noted.

Exploration expenses dropped 65 percent to Rs2.265 billion compared with Rs6.46 billion previously, mainly linked to lower prospecting expenditures and ongoing exploration costs.

Other income witnessed 87 percent decline, mainly due to exchange losses and lower interest rates in the said quarter.

For the half year ended December 31, 2020, OGDCL posted a net profit of 42.22 billion, translating into EPS of Rs9.82 compared with the profit of Rs53.11 billion and EPS of Rs12.35 in the same period last year. The company’s topline dropped 13 percent to Rs110.98 billion, a mainly due to a dip in oil and gas production by 4.0 percent and 5.0 percent, respectively.