NBP BoDs meet to approve annual financial statements

KARACHI  -  The Board of Directors of Nation­al Bank of Pakistan (NBP) met on Thursday to approve the annual financial statements for the year ended December 31, 2023. NBP, the Nation’s Bank, has marked yet another year of robust finan­cial outcomes, achieving a pre-tax profit of Rs101.3 billion, pre­senting a 61.4 percent increase from the preceding year’s Rs62.7 billion. The bank navigated a challenging macro environment, sustaining its support to custom­ers in line with its vision.

This year witnessed the cre­ation of total stakeholders’ value amounting to Rs1,065.3 billion, doubling the Rs540.0 billion of the previous year. A 35.4 percent surge in average earning assets, coupled with margin expansion on the back of higher average policy rates, generated gross interest revenue of Rs1,024.7 billion — 103.6 percent higher than Rs503.3 billion for 2022. Healthy growth was achieved in all income streams being Ad­vances (Rs221.8 billion, 57 per­cent up), Investments (Rs774.0 billion, 122 percent up), and Placements (Rs28.9 billion, 112 percent up). Pursuant to an ef­fective fund mobilisation, aver­age interest bearing liabilities of the bank reached Rs5,267.8 billion (2022: Rs3,871.9 billion). In the backdrop of higher aver­age interest rate, Rs855.9 bil­lion was paid to the providers of funds in terms of cost of funds. Accordingly, the bank’s net inter­est income for the year closed at Rs168.7 billion, depicting a YoY increase of 44.4 percent.

Despite lower trade activity amidst a challenging and uncer­tain business environment, the bank achieved a 10.7 percent growth in its non-fund income stream that amounted to Rs40.6 billion (2022: Rs36.7 billion). While equity investments of the bank generated dividend income of Rs5.3 billion (2022: Rs5.2 billion), income under fee and commission stream amounted to Rs22.0 billion (2022: Rs21.2 billion), and are reflective of the bank’s widespread customer base and market outreach. The bank’s FX income for the year closed at Rs7.1 billion which is slightly lower than Rs7.4 billion for the prior year due to adverse impact on account of forward ex­change contracts rates. Whereas, given the bullish trends of the stock market during most days of the years, the bank generated, mostly through its equity portfo­lio, capital gains of Rs4.4 billion, depicting a 285 percent increase over Rs1.1 billion of the corre­sponding year. Consequently, to­tal income for the year amounted to Rs209.4 billion i.e. Rs55.8 bil­lion or 36.4 percent higher, YoY.

Reflecting the impacts of in­flationary impacts, yearly in­crease in HR compensation, and the bank’s investment into its IT systems and upgrade of business premises, operating expenses for the year amounted to Rs93.3 bil­lion, depicting a YoY increase of 19.5 percent against Rs78.2 bil­lion in 2022. Pursuant to a pru­dent strategy of strengthen the bank’s capital base, a provision charge of Rs14.5 billion was cre­ated during the year. This is par­ticularly important in the back­drop that International Financial Reporting Standard 9 stands implemented effective January 1, 2024. Implementation of the standard is likely to attract high­er provisioning resulting into decreased regulatory capital and lending capacity of the banks. Pursuant to its prudent strategy of strengthening the capital base, the bank holds Rs203.6 billion in specific provisions, and Rs30.0 billion in general provisions against distressed loan port­folio, depicting a high specific coverage ratio at 92.2 percent. Accordingly, the bank’s pre-tax profit for the year amounted to Rs101.3 billion i.e. 61.4 percent up against Rs62.7 billion for the prior year. Tax charge for the year amounted to Rs49.4 billion, translating into an effective tax rate of 48.8 percent compared to 51.5 percent for the prior year. Resultantly, profit after tax for the year amounted to Rs51.8 bil­lion i.e. 70.5 percent higher than Rs30.4 billion for 2022.

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