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NBP nine-month profit likely to double

KARACHI (October 27 2003): National Bank of Pakistan's (NBP) profit in the nine months ended September 30, 2003, would be doubled because of tremendous growth in stock prices, helping the bank to book significant capital gains.

In the latest quarterly result carnival, companies belonging to one sector have posted decent earnings growth, which was none other than the banking sector.

Quarterly financial results of banks are indicating excellent growth over results of corresponding period of last year.

It is expected that other commercial banks would announce similar positive earnings, one of which is Pakistan's largest commercial bank, National Bank.

The bank will announce its financial results for the quarter ending September on Wednesday, October 29, 2003.

Investcap Securities expect that NBP will post record after-tax profit of around Rs 3.2 billion, or Rs 7.8 a share, for first nine months of 2003.

This profit figure is almost double from Rs 1.66 billion, over 90 percent growth of the same period a year ago.

In the first half of 2003, NBP has already booked after-tax profits of Rs 1.9 billion, or Rs 4.1 a share, against Rs 1.1 billion in 1H2002.

The brokerage house report said that in recent times, capital gains on investments have become a major earnings supporter for banks in Pakistan.

NBP has also used this tool, to some extent, in recent past, and has booked Rs 681 million capital gains in 1H2003.

The agency expects NBP to book capital gains on bonds, treasury and equities of approximately Rs 500 million in 3Q2003.

Its forecast of Rs 3.2 billion earnings for nine months of 2003 is based on this estimation of capital gains.

It is learnt that NBP has booked huge capital gains on sales of PIBs during last quarter.

If the capital gain is assumed at Rs 1 billion, NBP's earnings for nine months of 2003 could reach Rs 3.6 billion, or Rs 8.8 a share.

NBP is expected to see growth in its net interest margin (NIM) in the outgoing quarter, thanks to volume-based growth coupled with the ability to pass on interest rate decline to the depositors.

NBP would also book Rs1.75 per unit dividend declared by NIT that amounts to Rs 0.6 billion in the said quarter. This alone will contribute Rs 1.4 per share in the EPS.

Ever since the induction of professional management, National Bank's performance is improving in most of the fronts.

Now NBP is trying to become a true financial mart, having stakes in an exchange company, a brokerage house and now in Modaraba, to cater clients demanding Islamic mode of finance.

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