NBP Reports 91% Profit Drop in First 9 Months of 2024

National Bank Pakistan (NBP) reported a profit of Rs. 2.96 billion (EPS: Rs. 1.39) for the third quarter of 2024. This marks a significant 76% decline year-over-year but shows improvement compared to the previous quarter’s loss of Rs. 9.1 billion.

Total earnings for 9MCY24 were Rs. 3.5 billion, which is a 91 percent drop year over year. According to Arif Habib Limited (AHL), the main reason for the YoY drop in profits in the last quarter was lower net interest income.

NBP’s Net Interest Declines, Non-Funded Income Soars in 3Q24

The bank’s Net Interest Income for 3QCY24 was Rs. 33.6 billion, which is 29% less than the same time last year and 22% less than the previous quarter. Interest costs went down by 4.5% YoY and 2.9% QoQ, while interest payments dropped by 8.5% YoY and 5.7% QoQ.

The bank’s Non-Funded Income increased by 94.8 percent YoY in 3QCY24, taking the total for 9MCY24 to Rs. 40.8 billion, which is a 47.3 percent YoY rise. The main reasons for this growth in 9MCY24 were a 19.3 percent YoY rise in fee income, which reached Rs. 19.6 billion, and a big rise in foreign exchange income, which went from Rs. 2.8 billion to Rs. 5.4 billion during the same time last year. The bank also made a gain of Rs. 10.5 billion from selling assets, which is an increase of 331% year over year.

In the last quarter, a provisioning charge of Rs. 2.9 billion was made. This brings the total provisioning charge for 9MCY24 to Rs. 1.9 billion, down from Rs. 9.6 billion in 9MCY23. As you may remember, the bank also recorded an unusual item: a pension charge of Rs. 49 billion in 9MCY24.

This year, the bank’s OPEX raised up by 19% YoY, to Rs. 79.5 billion (3QCY24: Rs. 29.3 billion, up 34.91% YoY and 6 percent QoQ). Therefore, in 3QCY24, the Cost/Income ratio jumped to 62.8% from 40% in the corresponding period of the prior year.

The real tax rate also jumped from 46.9 percent SPLY to 78.6 percent in 3QCY24. This was probably because of charges relevant to ADR.