The Board of Directors of the National Bank of Pakistan, “NBP,” “the Bank,” met yesterday to approve the interim condensed financial statements for the half-year ended June 30, 2024. Demonstrating yet another period of remarkable performance, the Bank reported a total income of PKR 96.8 Bn, a 5.1% increase from PKR 92.2 Bn in H1’23. The Bank’s performance was particularly strong during Q2’24, with a total income of PKR 54.4 Bn compared to PKR 42.5 Bn earned during Q1’24. A strong performance across fund-based and non-fund-based earning streams drove these results.
In a stable interest rate environment, the Bank’s gross interest income surged by 30.1% YoY to close at PKR 562.2 Bn, an increase of PKR 130.3 Bn from PKR 432.3 Bn for the same period in 2023. Similarly, the Bank’s cost of funds also rose by 36.7% YoY, reaching PKR 490.8 Bn. Consequently, net interest income closed at PKR 71.8 Bn, reflecting a small decrease of 2% YoY. In the booming performance of the stock market during most of the period under review, the Bank recorded a gain on securities amounting to PKR 5.8 Bn, taking the total non-fund income to PKR 25.1 Bn, which is 31.7% higher YoY. The Bank’s Equity investment generated a divided income of PKR 3.0 Bn against PKR 2.4 Bn for the half-year ending June 30, 2023. Fee & commission income earned through branch banking operations also stood high at PKR 12.1 Bn, showing a YoY increase of 14.7%.
Amidst high inflationary pressures, the bank’s operating expenses for the half-year period under review amounted to PKR 49.1 Bn (excluding extraordinary items), which is 11.3% higher YoY than PKR 44.1 for a similar period last year. The Bank is investing significantly in upgrading its IT systems and infrastructure.
A major development during the period was that the Honourable Supreme Court of Pakistan (in Review Jurisdiction), by its order dated 27th March 2024, dismissed all the civil review petitions filed by the Bank, as a result of which the Supreme Court’s earlier decision dated 25th September 2017, in respect of the pension litigation, has now attained finality. This would bring a long-lasting uncertainty to an end. In compliance with the judgement, the Bank has recognised a total expense of PKR 49.0 Bn as an extraordinary/unusual item. It has made payments to the majority of petitioners as well as non-petitioners. Consequently, the Bank’s profit before tax for the six months closed at PKR 514.8 Mn (Jun’23:PKR 47.7 Bn), whereas profit after tax closed at PKR 251.1 Mn (Jun’23:PKR 26.0 Bn).
Effective January 1, 2024, the Bank has adopted International Financial Reporting Standard IFRS 9. This resulted in changes in the Bank’s accounting policies for the recognition, classification, and measurement of financial assets and liabilities and impairment of financial assets. As the Bank is following a prudent risk-profiling strategy, net reversals in provision during the period amounted to PKR 1.8 Bn against a total charge of PKR 0.4 Bn for the corresponding half-year period of 2023. The key contributor towards this drop was the loans & advances that recorded a net reversal of PKR 1.8 Bn. Credit loss allowances against Stage-3 NPLs stood at PKR 218.5 Bn (Dec’23:PKR 203.6 Bn). Thus, provision coverage at June 30, 2024 stood at 100%.
With a 6.6% YTD growth in its assets base, the Bank achieved PKR 7 TRILLION milestone in its balance sheet as its total assets reached PKR 7.1 Trillion from PKR 6.7 Trillion at the YE’23. While investment (at cost) increased by 7.0% to reach PKR 4,699.9 Bn, gross advances recorded a 5.6% decrease to close at PKR 1,540.1 Bn. The Bank maintains a strong funding and liquidity profile through a well-diversified funding portfolio. As of June 30, 2024, total deposits amounted to PKR 4,103.5 Bn. While CASA ratio stood at 80.1%, Liquidity Coverage and Net Stable Funding also remained high at 197% and 174%, respectively. Total Capital Adequacy Ratio stood at 24.72%, against 25.47% at the YE’23. This drop in capital is mainly triggered by a one-off adjustment in the opening equity due to incremental provisioning as per IFRS 9. These ratios depict the strong resilience and financial soundness of the Bank. The Bank enjoys the highest credit ratings of AAA / A1+ categories for both long-term and short-term terms, respectively, as reaffirmed by PACRA and VIS Credit Rating Company in June 2024.
As of June 2024, the Bank achieved a major milestone in agriculture financing. The Bank became the largest lender to the agriculture sector by completing a record disbursement of PKR 368 Bn and an outstanding loan book of PKR 104 Bn. This aligns with the Bank’s vision of serving the nation by improving access to finance in priority sectors.
The Bank’s President and CEO, Mr. Rehmat Ali Hasnie, appreciated the efforts and dedication demonstrated by the Bank’s employees toward financial results and strategic delivery. The Bank is pursuing a major organizational and technological transformation, product enhancement, digitalization, and initiatives to promote financial inclusion, focusing on commercial and rural segments.
With commendable financial results delivered, management’s strategic focus remains on enhancing service quality levels, diversifying its outreach through digitalization, and increasing its range of products and services. As the Nation’s bank, improving access to financial services to all has been a goal of the Bank since its creation in 1949.
