KARACHI (November 09 2002) : The profits of National Bank of Pakistan Ltd., surged tremendously and posted an increment of near five-fold in nine months ended September. 30, 2002 as compared with same period a year ago.
NBP on Friday announced the nine months results through the Karachi Stock Exchange and its profit amounted to Rs 1.664 billion from Rs 312 million of the same period a year ago.
The bank posted a net profit of Rs 534 million in third quarter of 2002. The nine months results are 5.3 times higher than the profits for the same period last year.
Increase in profitability has been on account of reduction in amortisation costs from Rs 1.9 billion last year to Rs 271 million this year.
This decline was expected as the Rs 2.7 billion amortisation expense relating to the 1997 voluntary handshake schemed ended in 2001.
The amortisation expense in the current results is for the voluntary handshake scheme carried out by the bank towards the end of the last year, said Zaheer-ud-Din Khalid, research analyst at First Capital Securities in Karachi.
“The pre-tax pre-provision profits are in line with our expectations. However, the provisions are lower than what were expected. This comes across as a surprise as the bank's provisions/ NPL ratio had gone down after the amalgamation of NDFC.
“Consequently we were expecting higher provisions this year, take the ratio back to its previous levels. Another surprising item in the results is the effective tax rate for the bank third quarter 2002.
“The effective tax rate has gone up to 65 percent in third quarter 2002 from its level of 50 percent in the half year results.”
The brokerage houses are of the opinion that this might be because of some prior period adjustments. Going forward, the bank's trend of improvement earnings to continue. However, the results for the fourth quarter 2002 are likely to be lower than that of third quarter of 2002 on account of pressure on spreads of the bank.