KARACHI (March 27 2004): National Bank of Pakistan pre-tax profit reached an all-time high level and was highest in the history of the banking sector in Pakistan because of tremendous growth witnessed in credit to industries, deposits and investment in stock market.
The NBP during 1999 had earned a profit after-tax of Rs 400 million. After change in the management in 2000 the bank showed tremendous growth and turnaround and the profit for the year cross Rs 1 billion mark. The momentum continues to gather pace and the pre-tax profit during 2003 beat all bank/financial institutions in the country.
The Board of Directors of the NBP approved the financial statements of the bank for the year ended December 31, 2003, in its meeting on Friday.
The Chairman and President of NBP, S Ali Raza, informed the Board members that 2003 was an outstanding year and reflected the positive momentum that NBP had generated over the last three years.
In 2003, NBP earned a record pre-tax profit of Rs 9 billion, an increase of 50 percent over previous year and highest in the history of the banking sector in Pakistan. All key ratios improved considerably. Cost/income ratio improved to 0.38 from 0.48.
Pre-tax return on equity increased to 54 percent from 45 percent, while pre-tax return on assets further improved to 2 percent from 1.3 percent of the last year.
All these ratios individually substantially outperformed similar ratios of the peer group of large banks in Pakistan and are equivalent or better than the high credit rated banks globally.
Earning per share rose to Rs 10.23, again the highest in the banking sector in Pakistan. Based on the results, the board declared a cash dividend of 12.5 percent and bonus of 20 percent.
During 2002, the bank's pre-tax profit was Rs 6.045 billion while it paid cash dividend of 12.5 percent and bonus of 10 percent.
According to an analyst, total assets of NBP stood at Rs 472 billion, highest in the country, compared with Rs 435 billion of Habib Bank, Muslim Commercial Bank Rs 272 billion and United Bank Ltd Rs 217 billion. The pre-tax profit is also highest as compared to other banks.
NBP's pre-tax profit is Rs 9 billion while HBL pre-tax profit stood around Rs 5.4 billion, United Bank Rs 4.3 billion and MCB Rs 3.6 billion.
Return on equity as of pre-tax profit was around 54.7 percent for NBP as compared with Habib Bank 37.1 percent, 46.3 percent for United bank and 51.4 percent for MCB.
NBP is now well positioned to capitalise on future opportunities in all sectors where growth is envisioned ie retail banking, mortgages, SME lending, agriculture, infrastructure financing, asset management and the derivatives market.
NBP's product base is second to none; its technology is being strengthened and the quality of its premises is being upgraded. With its size, its customer base of 10 million, the largest in the country, and its large domestic and international franchise, NBP is rapidly being recognised as an international bank of repute.
Last July, The Banker Magazine, London based, on the 2003 results rated NBP's return on capital as the highest in Asia and Eighth in the world. The 2003 results should enable it a further climb on this exclusive ladder.
The NBP's operating performance, efficiency and capital adequacy ratio are substantially better than the peer group in spite of the fact that in case of UBL and HBL Rs 21 billion and Rs 20 billion respectively were provided by SBP to facilitate and enable privatisation.
This subvention helped in significantly improving financial performance of UBL and HBL as in the absence of this subvention results could have been significantly lower than what these are at present. In sharp contrast, NBP has to fund and take a hit of Rs 13 billion on account of Golden Handshake Scheme Payments of 1997.
NBP accounting policy is by and large conservative as compared with other banks. A number of benefits, like discounting forced sales values and recognition of actuarial gains on pension, have not been taken into account. It is also important to note that year-over-year performance of NBP has been better than all its competitors, analysts said.