KARACHI    -  The Board of Directors of National Bank of Pakistan, in its meeting held on October 27, approved the condensed interim financial statements of the Bank for the period ended September 30, 2020. With strong growth in core earnings, the Bank recorded excellent results and reported unconsolidated profit after tax of PKR 26.1 billion, up by PKR 9.8b or 60% compared to the corresponding period last year. Earnings per share increased to Rs. 12.28 against Rs. 7.68 of Sep ’19 and Return on Assets and Return on Equity improved from 0.7% and 14.0% in Sep ’19 to 1.2% and 19.7% respectively in the nine months period ended September 30, 2020.

During the period, the Bank earned gross mark-up/interest income of PKR 206.0b (+23.1% YoY), with Investments contributing PKR 124.9b (+49.5% YoY) and Loans & Advances generating PKR 78.0b (+0.6% YoY). The average interest-bearing liabilities increased 17.5% to PKR 2,458.5b and total cost of funds increased to PKR 126.2b (+11.1% YoY). However, the cost of deposits dropped by 46 bps to 5.57% for 9M ’20 (9M ’19: 6.03%). Overall, net mark-up/interest income closed at PKR 79.8b (+48.2% YoY). The Bank generated non mark-up income of PKR 27.7b (Sep ’19: PKR 25.6b) constituting 25.8% of the total income (Sep ’19:32.2%). Accordingly, total revenue closed 35.4% higher at PKR 107.6b.

Operating expenses of the Bank increased 8.8% YoY to PKR 45.0b. However, the Bank’s cost-to-income ratio improved to 41.8% as against 52.1% for the same period last year. NPLs increased during the current nine month by PKR 24.0b to PKR 172.7b. The Bank follows a prudent approach to strengthening the balance sheet by maintaining a robust level of provisions. Provision charge of PKR 21.8b (Sep ’19: PKR 5.9b) was created during the period, increasing total provisions to PKR 167.8b that translates into a coverage ratio of 97.2%.

The Bank’s balance sheet stood at PKR 2,783.5b which is 10.9% lower than the PKR 3,124.4b at December 31, 2019. This drop is mainly because the Bank reduced its money market borrowings by PKR 329.16b in line with its funding & liquidity position. Investments, that constitute the bulk of the asset-mix, dropped marginally by 4.9% to PKR 1,368.4 bn. Due to reduced private sector credit demand and some seasonal adjustments, net advances also registered a decline of 11.5% over Dec ’19 level and closed at PKR 892.6b. On the liabilities side, deposits remained stable throughout the period and closed at PKR 2,174.9b, marginally 1.1% down YoY. The Bank’s Liquidity Coverage and Net Stable Funding Ratio stood at 182% and 263%, comfortably above the statutory requirement of 100%. Also, CASA ratio improved to 83.0% from 81.8% at the year-end 2019.

Higher profitability, coupled with reduction in required conservation buffers as well as total RWAs, has improved the Bank’s Tier-1 capital adequacy ratio to 15.68% (Dec ’19: 12.11%) and the total capital adequacy ratio (CAR) to 20.75% (Dec ’19: 15.48%). In June 2020, VIS Credit Rating and PACRA Credit Rating reaffirmed the Bank’s credit rating as “AAA” (Triple AAA), the highest credit rating awarded by the rating company for a bank in Pakistan.