NBP posts massive loan losses

NBP profit declines by Rs 3 billion in CY18

Karachi, February 22, 2018: National Bank of Pakistan’s (NBP) profit declined by 13 percent during the last fiscal year (CY18) due to default by a single borrower group.

The default of a company compelled for a massive provisioning of, of which bank profit has decreased by Rs 3 billion in the last year.

According to NBP’s financial results profit before provisions was amounted to Rs. 41.0 billion in 2018 which is 11.4 percent higher than Rs. 36.8 billion for the year 2017.

During the year, the NBP also recognized significant increase in loan-loss & other provisions which amounted to Rs. 11.3 billion as against Rs. 1.2 billion in the prior year. This is mainly due to default by a single borrower group which has been fully provided for, the bank said.

Meeting of the Board of Directors (BoD) of the Bank was held on February 22, 2019 at the Bank’s Head Office in Karachi. The BoD approved the financial statements of the Bank for the year ended December 31, 2018.

Maintaining its position in the industry, this year too, the bank recorded solid growth in terms of both balance sheet size and the total revenues. Despite a generally difficult year for the banking industry, the Bank has achieved the highest ever total revenue in its history of seven decades.

Total revenue of the Bank amounted to Rs. 96.9 billion which is 13.6% higher than Rs. 85.3 billion of previous year. While net interest/mark-up income increased by 11.8% to Rs. 60.7 billion (2017 : Rs. 54.3 billion); a 16.7% growth was also achieved in non-interest / mark-up income which stood at Rs. 36.2 billion.

Therefore, the after-tax profit for the year is lower by 13.1% against previous year and amounted to Rs. 20.0 billion (2017: Rs. 23.0 billion). This translates into earnings per share of Rs. 9.41 (2017: Rs. 10.82). Pre-tax and after-tax return on average equity stood at 21.8% and 14.7% (2017: 29.8% and 18.7%) respectively.

Healthy growth in balance sheet size was also recorded as total assets of the Bank stood at Rs. 2.8 Trillion depicting 11.7 percent growth YoY.

Gross loans & advances of the bank crossed the Rs 1 trillion mark and increased by Rs. 202.5 billion.

The Bank’s deposits also crossed Rs. 2 Trillion mark as the same increased by Rs. 284.3 billion during the year. For better liquidity and rate-risk management, the Bank maintains a healthy portfolio of investment in low risk securities.

The Bank has filed a review petition against the judgement of the Supreme Court of Pakistan in the pension case and has also moved an application for constitution of a larger bench which has been accepted.

Pending the decision of review petition, financial impact of the subject case has not been included in the instant financial statements as the Bank looks forward to a favourable outcome of the case.

The BoD is conscious of the fact that the shareholders look forward to receiving dividend. The Board deliberated at length whether or not cash dividend should be recommended.

Keeping in view the significance of the amount involved in the pensions related case, the BoD considered it prudent to retain the profits for the time being to maintain & further strengthen capital base of the Bank. Accordingly, the BoD did not recommend any dividend for the year 2018.


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