Inside Financial Markets

Surprising Results of National Bank of Pakistan (NBP)

Azee Securities (Pvt) Ltd.

National Bank of Pakistan (NBP) announced its half yearly results with after tax profit of Rs 7.54 billion as compared to Rs 8.13 billion during half year ended 2014, translating into a decline of 7%. Higher provisions by 169% became a key reason that declined the earnings growth. Earnings per share turned out to be Rs 3.54/share as against Rs 3.82/share during first half ended 2014.

Net Interest Income stirring

The increase in balance sheet size and high yielding investments led NBP to clock half year net interest income from Rs 19.5 billion in 1HCY14 to Rs 24.1 billion in 1HCY15, showing an increase of 24%. The bank is more focused towards expansion of high yielding advance salary, agriculture financing and gold loans. However, the main barrier that grinded the bank’s profitability was hefty Non-performing Government of Pakistan’s guaranteed loans. Further, to cover the risk of potential credit losses on the portfolio, the bank had allocated Rs 12 billion to a “General loan loss reserve” in order to protect the equity base of the bank from future contingencies in respect of the credit portfolio.

Non funded income improved

Non-interest income increased by 25% on the back of better capital gains to reach Rs 19.3 billion for 1HYCY15 as compared to Rs 15.5 billion during 1HCY14. The bank realized gains on PIBs and equity investments to uplift capital gain up to Rs 7.9 billion as against Rs. 4.6 billion of comparative period last year. Additionally, exchange income also increased by Rs 706 million during the year. On the contrary, other income got reduced by 50% due to impact of reduction in the rate of compensation on delayed refunds.

Deposits aiming towards non-remunerative accounts

Overall deposits have witnessed an increase by 3.2% YoY. Current deposit account rose by 10.5% from Rs 426.5 billion in December 2014 to Rs 471.2 billion in June 2015. Saving account increased from Rs 360.7 billion to Rs 348.1 billion during first half 2015 depicting an increase of 3.6%. CASA turned out to be 75.75% as at June 2015 as compared to 72.82% during December 2014. While advances got declined by 1.8% reason being seasonal adjustments and conversion of loans into Term Finance Certificates.

Investment focusing towards T-Bills

More focus seen towards treasury bills where we saw an increase of 49.9% from Rs 122.3 billion in December 2014 to Rs 183.3 billion in June 2015. Investment in PIBs witnessed slight uptick of 0.22% from Rs 306.5 billion to Rs 307.1 billion during same comparative period. Overall investment shown growth of 13.3% from Rs 561.8 billion during December 2014 to Rs 636.5 billion as at June 2015.


National bank is currently trading at Rs 51.59 showing an upside potential of 24% to reach our December 2015 target price of Rs 64/share. We recommend a ‘BUY‘ stance to our valued customers.

Baqar Hussain

A Wannabe CFO, just had stepped in the corporate sector, willing to explore every aspect here and learn as mush as i can, awareness for those who dont, get the info where ever possible and stay up to date always.

The Canadian Securities Institute


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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)