The meeting of board of directors of National Bank of Pakistan (NBP) was held today at NBP Head Office Karachi and it approved the financial statements of the Bank for the year ended December 31, 2016. NBP posted profit after tax (PAT) of Rs 22.8 billion up by 18 per cent for the year 2016 against Rs 19.2 billion of 2015. This translates into earnings per share of Rs 10.69 compared to Rs 9.03 in 2015.
The board recommended cash dividend of Rs 7.5 per share for the year which translates into payout ratio of 78 per cent (after statutory reserve allocation).
“NBP reported a higher than expected earnings during fourth quarter 2016 mainly on the back of provision reversals of Rs 2.2 billion in 4Q2016 and higher than anticipated capital gains of Rs 2.6 billion,” the analyst at Topline brokerage house said. NPL recoveries from international operations and absence of any new NPL accretion led to provision reversals of Rs 2.2 billion, he said.
In a statement, the bank said that it has reported highest ever performance numbers in its history in the year 2016, maintaining its leading position amongst the peers. Outstanding growth during the year was achieved both in financial performance and financial position of the Bank.
Despite a generally difficult year with downward trend for the banking industry on account of reduction in discount rate and lower exchange arbitrage opportunities, the Bank recorded a growth of Rs 3.9 billion i.e. 12 per cent in profit before tax which amounted to Rs 37.1 billion in 2016. Pre-tax and after-tax return on equity were 31.5 per cent and 19.3 per cent (2015: 29.3 per cent and 17 per cent) respectively.
The bank made significant progress in improving its loan book quality as non-performing loans recorded a net reduction of Rs 7.9 billion during the year. During the year, healthy balance sheet growth has also been recorded reaching to Rs 1,975 billion, making. This depicts a 16 per cent YoY growth against Rs 1,706 billion at the end of year 2015.
During the year, gross advances of the bank increased by 13 per cent to Rs 782 billion compared to Rs 692 billion as of December 2015. Similarly, the bank achieved a 16 per cent growth in its deposits as the same reached Rs 1,657 billion.
With “AAA” credit rating, the Bank is a driving force in retail banking, given its large distribution network. Bank’s ATM and Islamic branch network closed at the highest level in the Bank’s history, with 118 Islamic branches and over 1,300 ATMs.
Net Interest Income (NII) in 4Q2016 was down 6 per cent YoY but it still remained higher than our estimates of Rs 14.9 billion in fourth quarter 2016. This is in contrast to NII growth posted by HBL (0%), MCB (-19%) and UBL (-5%). The analysts said that higher than expected NII is due to strong volumetric deposit and advances growth.
Non-interest income was up 14 per cent YoY on the back of higher capital gains and fee & commission income during the quarter.
Non-interest expense increased by 16 percent (slightly higher than our estimates) containing bottom-line growth of the company.
