Karachi March 9 2022: National Bank of Pakistan announced cash payout after a period of 5 years as per company filling to the exchange.
The Bank announced a cash payout of PKR 1 per share. This is the first time that the bank has declared cash dividend since 2016 due to the likely impact of pension case, despite some positive signals, it remained a cause of concern. The first priority of Directors was to maintain continuity of the Bank’s business which is very much dependent upon the capital base of the Bank. The BoD is conscious of the fact that the shareholders look forward to receiving dividend.
In 2021, The Bank recorded profit before tax amounting to PKR 52.9 Bn i.e. the highest ever in history of the Bank. Whereas, due to a significant impact of extraordinary item amounting to PKR 9.8 Bn, the after-tax profit closed at PKR 28.0 Bn which is 8.3 percent down YoY. For the year 2021, gross mark-up/interest income closed 10.1 percent lower YoY at PKR 231.9 Billion “bn” (2020:PKR 257.8 bn); whereas the interest/mark-up expense amounted to PKR 134.3 bn, of which PKR 87.8 bn or 65.4 percent was paid to the depositors. Consequently, net interest/mark-up income “Nil” closed at PKR 97.62 bn which is 6.3 percent lower, YoY.
Despite a lacklustre trade & business activity during the year, the Bank succeeded in maintaining its non-mark-up / interest earning “NFl” stream that closed at PKR 36.9 bn (2020:PKR 36.1 bn). Accordingly, total revenue of the Bank closed 4.0 percent down YoY at PKR 134.6 bn (2020:PKR 140.2 bn).
Operating & other expenses dropped by 4.9 percent down YoY to close at PKR 60.0 bn as against PKR 63.11 bn of prior year. This translates into a cost-to-income ratio improving 40bps YoY, from 45.0 percent in 2020 to
44.6 percent in 2021. Consequently, profit before provision stood at PKR 74.6 bn, marginally 3.3 percent lower than PKR 77.1 bn of 2020. However, this drop in revenue was off-set by a favourable variance in provision charge that dropped 61.4 percent to PKR 11.9 bn as compared to PKR 30.9 bn in the prior year. This year, NPLs recorded an increase of 15.6 percent or PKR 26.6 bn, totalling to PKR 197.9 bn (2020:PKR 171.3 bn). This was mainly triggered by an industry wide default by a major oil marketing company.
Consequently, profit before tax closed 14.4 percent higher YoY at PKR 52.9 bn (2020: PKR 46.2 bn). As PKR 9.8 of civil penalty is imposed in US operations, profit after tax closed at PKR 28.0 bn which is 8.3 percent lower than PKR 30.6 bn of previous year. Pertinent to mention, the Bank’s income is also subject to a PKR 4.0 bn drag on account of certain legacy public-sector non-performing loans as well as the impact of additional tax due to lower Advance to deposit ratio. The Federal Government, in the Federal Budget2022, has imposed a 2.5 percent additional tax on banks if their Advances to Deposit Ratio falls below 50 percent; and 5 percent if the ADR goes below 40 percent. While the banking industry is already subject to a super tax charge of 4 percent, this additional tax has adversely affected the after-tax profitability of the banks.
The Bank’s end of year total assets closed at PKR 3,846.7 bn which is a massive 27.9 percent increase from PKR 3,008.5 bn at end of 2020. This was mainly driven by a growth of PKR 600.2 bn in the deposits and a growth of PKR 174.4 bn in the borrowings. Capital & reserve closed at PKR 286.2 bn i.e. PKR 18.6 Bn or 7.0 percent up from PKR 267.6 billion on December 31, 2020.
The Bank’s financial soundness also improved significantly during the year 2021. While Common Equity Tier 1 (CET1) Capital ratio improved to 15.42 percent (2020:14.99 percent), the Total Capital Ratio also improved at 20.39 percent (2020:19.78 percent). Similarly, the Bank’s Leverage ratio was 3.47 percent at the end of 2021(2020:4.06 percent). The Bank’s liquidity coverage and net stable funding ratios improved to 164 percent (2020:180 percent) and 278 percent (2020:256 percent), respectively against regulatory requirements of 100 percent. On a positive note, the Bank maintained its CASA ratio at 83 percent. Detailed coverage of the financial performance and other organizational development is also given elsewhere in this Annual Report.
