NBP first quarter net profit up by 73 percent

KARACHI (May 01 2004): National Bank of Pakistan (NBP) announced sparkling results for the first quarter of 2004, beating market expectations, as its profit before tax posted a growth of 77 percent and profit after tax 73 percent.

NBP posted 73 percent growth in bottom line in the first quarter ended on March 31, 2004, as its profit after tax (PAT) settled at Rs 971 million with an earning per share of 1.97 rupees as compared to Rs 561 million or EPS of Rs 1.14 for the corresponding period of last year.

In line with historical trend, the bank did not announce an interim dividend with the first quarter results.

The NBP share was up by Rs 4.80 at the trading session on the Karachi Stock Exchange on Friday.

However, Faisal Potrik, head of research at First Capital Equities said he saw further upside from these levels. “We were quite impressed with the 27 percent growth in Net Interest Income (NII), which just goes to reiterate our point of core earnings growth in NBP,” he said.

“At a time when we believe there has been a decline in Net Advances for the quarter due to retirement of commodity loans, NII growth is even more noteworthy,” he said.

Furthermore, rock bottom interest rates to depositors has kept interest expenses down despite a Rs 10 billion to Rs 13 billion increase in deposits in 1QCY04.

Non-interest income to the tune of Rs 1.3 billion is likely to be composed mainly of capital gains on equities as the stock market showed more strength in the outgoing quarter.

NBP has recorded lower provisions at Rs 302 million as compared to Rs 400 million in the same period of last year despite more stringent prudential regulations for non-performing loans as NBP has adequately provided for loans by recording higher provisions in 2003.

At the same time, NBP's management has been able to keep administrative expenses in check, largely by branch rationalisation, which it had initiated a couple of years ago.

Following is the National Bank of Pakistan's earnings of first quarter (in millions of rupees).

===========================================================                          Jan-March     Jan-March     Change                            2004          2003          (pc) ----------------------------------------------------------- Net Interest Income       3,016          2,385           26 Non interest income       1,270          1,143           11 Admin & other expenses    2,021          2,017            - Provisions for NPLs         302            400          -24 Staff Welfare Fund           98             56           77 Profit before tax         1,865          1,055           77 Tax                         894            494           81 Profit after tax            971            561           73 EPS (diluted)              2.37           1.37            - Effective tax rate         48pc           47pc            - ===========================================================

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