Karachi, February 25, 2021: For the year 2020, National Bank of Pakistan (NBP) has delivered strong financial results, demonstrating resilience of its business model and the efforts of its 15,000+ workforce. During these challenging times, the Bank has worked with the Government to support economic activities and to ensure that customers are serviced uninterruptedly.
Despite the challenging times, the Bank recorded highest ever after tax profit in its history. Gross mark up/interest income closed 7.7 Percent higher YoY at PKR 257.81 billion versus PKR 239.48 billion in 2019; whereas the interest/mark-up expense amounted to PKR 153.66 billion, of which PKR 103.38 billion or 67.3 Percent was paid to the depositors.
Accordingly, net interest/mark-up income closed at PKR 104.16 billion, 44.8 Percent higher YoY. Despite reduced economic activity during the year, the Bank succeeded in maintaining its non-mark-up / non-interest earning “NFI” stream at PKR 36.08 billion (2019:PKR 36.20 billion).
Accordingly, total revenue of the Bank closed 29.7 Percent up YoY at PKR 140.23 billion (2019: PKR 108.11 billion). As the Operating & Other expenses dropped by 4.2 Percent down YoY by closing at PKR 63.11 billion, the cost-to-income ratio improved from 60.9 Percent in 2019 to 45.0 Percent in 2020. Profit before provision closed 82.5 Percent up at PKR 77.12 billion (2019:PKR 42.25 billion).
The Bank is more vigilantly monitoring its credit portfolio by moving from incurred to expected credit loss approach. This year, besides the specific provisions of PKR 15.9 billion, the Bank has also booked general provisions of PKR 13.4 billion to make its balance sheet more resilient in the prevailing economic circumstances. During the year, NPLs of the Bank increased 15.2 Percent to close at PKR 171.29 billion (2019:PKR 148.75 billion).
Accordingly, profit before tax closed 65.1 Percent higher YoY at PKR 46.22 billion (2019: PKR 28.00 billion); and profit after tax stood 93.3 Percent higher YoY at PKR 30.56 billion (2019:PKR 15.81 billion). This translates into Return on Average Assets and Return on Equity of 1.0 Percent (2019:0.5 Percent) and 17.2 Percent (2019:10.2 Percent), respectively.
The Bank’s end of year total assets closed at PKR 3,008.53 billion, 3.7 Percent lower than 2019. This drop is mainly driven by a reduction of PKR 333.22 billion in the money market borrowings in line with our prudent funding & liquidity strategy. Capital & reserves at PKR 267.56 billion i.e. PKR 34.9 billion were 15.0 Percent up from PKR 232.62 billion on December 31, 2019.
The Bank’s financial soundness also improved significantly. While Common Equity Tier 1 (CET1) Capital ratio improved to 14.99 Percent (2019:12.11 Percent), the Total Capital Ratio also improved to close at 19.78 Percent (2019:15.48 Percent). The Bank’s liquidity and net stable funding ratios improved to 180 Percent (2019:148 Percent) and 256 Percent (2019:233 Percent), respectively. On a positive note, the Bank’s CASA ratio also improved to 83.8 Percent (2019:81.8 Percent).
Keeping in view the likely impact of certain contingencies, the Board considered it more prudent to retain profits for the time being and consider declaration of dividends at a future date.
The Bank is executing a post-crisis recovery strategy on how to continue playing its systemically important role in economy and serve its customers, while also maintaining a strong and resilient balance sheet to deliver performance for shareholders. For the year 2021 & beyond, the Bank’s business strategy will continue to focus on financing and supporting underserved sectors including SME, Microfinance, Agriculture Finance and low–cost housing on a priority basis.
