Karachi March 4 2022: As at 31 December 2021, the Bank’s total Capital Adequacy Ratio was at 13.82 percent compared to 16.97 percent at end of December 2020, as per company filling to the exchange.
However CAR is still well above against the revised requirement of 11.50 percent (including Capital Conservation Bu er). Prior to the relaxation in this regard, the regulatory requirement was set at 12.50 percent with a CCB of 2.50 percent.
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The Bank’s Common Equity Tier 1 (CET-1) to total Risk Weighted Assets ratio at 31 December 2021 was at 10.22 percent, well above the requirement of 6.00 percent.
The Bank posted Profit before tax (PBT) of Rs. 5,149.219 million and Profit after tax (PAT) of Rs. 2,854.147 million for the year ended 31 December 2021, as compared to Rs. 4,034.755 million and Rs. 2,400.272 million respectively for the prior year, indicating an improvement of 27.62 percent and 18.91 percent respectively. As a result, earnings per share (EPS) was recorded at Rs. 2.5889 per share for the year 2021, as compared to Rs. 2.1772 per share for the year 2020.
The Bank’s net markup income for the year ended 31 December 2021 improved to Rs. 10,937.534 million from Rs. 10,655.256 million reported for the year ended 31 December 2020, improving by 2.65 percent as spreads continued to remain under pressure. Average net investments improved notably to Rs. 276,334.220 million for the current year as against Rs. 223,132.229 million for the prior year. While yields on investments reduced to 8.19 percent in 2021 from 10.35 percent in 2020, this volumetric increase kept the Bank’s income from investments intact at Rs. 22,619.325 million for the year, ending only slightly lower than Rs. 23,086.990 million reported in the year 2020.
On a year on year comparison, yields on advances also remained noticeably lower, at 7.63 percent for the year ended 31 December 2021 as against 9.74 percent for the prior year, as the gradual reduction in policy rates by the State Bank of Pakistan over the course of the last year took full e ect this year. The Bank’s average net advances also reduced to Rs. 175,221.482 million for the year ended 31 December 2021, as against Rs. 193,261.875 million for the prior year. Due to decline in volumes, but primarily driven by reduction in yields, income from advances ended lower at Rs. 13,373.990 million for the current year as against Rs. 18,826.212 million for the prior year.
The Bank’s period end deposits, after witnessing a decline at June 2021 end, picked up at September 2021, and were reported at Rs. 403,036.554 million at 31 December 2021, improving by Rs. 57,537.786 million or 16.65 percent against the year-end 2020 position. In terms of averages, the overall portfolio grew by Rs. 30,887.591 million, or 9.87 percent year on year. More importantly, CA averages grew by Rs. 18,427.399 million or 23.84 percent year on year, as the Bank continued to maintain its focus on CASA mix improvement and retention of current accounts, rationalizing of funding costs and improvement of overall margins.
As a result of this strategy, the Bank’s End of Period CASA growth was recorded at an impressive Rs. 44,113.100 million, or 18.60 percent year on year, with mix improving to 69.80 percent at 31 December 2021 (31 December 2020: 68.65 percent). With improved CA averages, the Bank’s overall cost of deposits reduced by 188 bps, ending at 4.86 percent for the current year, as against 6.74 percent for last year, and overall deposit expense reduced to Rs. 16,719.062 million for the current year as against Rs. 21,103.983 million for the prior year.
On the borrowings side, the Bank’s average borrowings increased by Rs. 19,417.682 million from December 2020 levels, while cost decreased to 6.22 percent for the current year as against 7.99 percent for the prior year. The Bank’s overall Cost of funds decreased to 5.08 percent for the year ended 31 December 2021 as against 6.89 percent for the prior year.
Non markup income for the year 2021 was reported at Rs. 4,290.235 million, improving by 12.68 percent from Rs. 3,807.495 million reported for the year 2020. Core fee and commission income registered an increase of Rs. 298.762 million or 16.83 percent year on year, while Dividend income also indicated a healthy increase of Rs. 216.207 million year on year. The Bank’s foreign exchange income witnessed an increase of Rs. 123.981 million year on year, and the overall income was further augmented by a capital gain booked on disposal of property amounting to Rs. 281.800 million in the current year. In terms of overall revenue, the Bank reported a growth of Rs. 765.018 million, or 5.29 percent year on year.
Non-Markup expenses were reported at Rs. 10,190.506 million for the year ended 31 December 2021 as against Rs. 9,026.293 million in the year 2020, indicating a growth of 12.90 percent. Out of this growth, which includes expenses on account of branch expansion as well as development expenditure on systems and new initiatives, growth attributable as business as usual was 6.6 percent. The management remains committed on pursuing stringent cost discipline measures to keep overall costs in check.
Under the head of provisions, with the absence of one off additional equity investment impairment charge of Rs. 717.214 million booked in the prior year, coupled with decent recoveries against classified advances in the current year, a positive year on year variance was observed. The Bank booked a net provision reversal of Rs. 129.974 million for the current year against classified advances, while a net charge of Rs. 673.486 million had been considered last year.
The Bank continues to carefully and prudently monitor its portfolio. With the recent changes to the SBP policy rate, the Bank’s Money Market Desk continues to assess the portfolio yields and durations so that timely decisions are taken at the right time. Furthermore, as per SBP and GOP directives, all Banks have been assigned with targets for housing and construction finance as well as other programs and initiatives which continue to be tracked and monitored. With an e ective risk management framework in place, the Bank remains committed to facilitating the rebound of the economy, whilst maintaining regulatory compliance with all applicable laws and best practices.
The Bank’s gross Advances to Deposits ratio (ADR) at the year-end 2021 was reported at 43.03 percent as against 49.98 percent in 2020. The Non-performing loans to total Advances ratio stood at 5.95 percent at 31 December 2021 (31 December 2020: 6.25 percent), with specific coverage maintained at 76.51 percent (December 2020: 75.16 percent).
