BOP to raise Rs5bn for tier 1 capital

March 17, 2022 (MLN): Bank of Punjab (PSX: BOP) will raise Rs5 billion for tier 1 capital in the ongoing calendar year 2022 to improve the Capital Adequacy Ratio (CAR), the management of the bank informed during its corporate briefing session on Thursday.

Accordingly, the CAR will increase to 14% from the existing level’s 12.57% while another Rs5bn in tier 2 capital would increase the CAR to around 16%.

The management further informed that it is planning to introduce its credit card service to retain existing customers as well as attract new clients, briefing takeaways covered by AKD Securities noted.

In addition, the bank will add 116 new branches in its network by the end of CY22, the majority of them in Karachi to penetrate the SME segment. Hence, the bank expects higher growth in deposits and advances in comparison to CY21.

Apprising investors pertaining to the financial performance, the management stated that the bank witnessed a significant 79% YoY increase in net profits to Rs12.4 billion for CY21, compared to Rs6.9 billion reaped in last year.

This has caused the earnings per share of the bank to clock in at Rs4.71 as opposed to Rs2.63 in CY20.

The significant increase in profitability was attributed to reversals of provisions and higher net mark-up income.

During CY21, BOP’s interest income decreased by 5%, while interest expense lowered by 17% YoY, which countered the lower interest earned. Consequently, Net Interest Income (NII) was recorded at Rs29.8bn as compared to Rs23bn in CY20; up by 28% YoY.

At present, around 60% of bank deposits are tilted towards the public sector which remains a key challenge. In order to optimize the deposit mix, the management has planned new targets for the retail and corporate banking teams to penetrate the private and retail segments.

With regards to the implementation of IFRS 9, the management of the bank said that SBP might defer it for another year.

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