September 03, 2024 (MLN): The country’s sole government-owned bank, the National Bank of Pakistan (PSX: NBP), has recently been applauded for a series of noteworthy developments across financial, technological, and administrative domains.
These strides were discussed during the Bank’s Analyst Briefing yesterday wherein management informed that NBP successfully expanded its Current Account portfolio by Rs342 billion during the first half of 2024.
93% of these accounts are categorized with the minimal interest charge under the remunerative segment.
Along with this, the bank's savings accounts increased by 5.9% or Rs53bn from December 2023 levels, although term deposits experienced a marginal decline of Rs9.5bn over the same period.
The overall impact on the bank’s financials saw interest expenses outpacing interest income, resulting in a 1.9% YoY reduction in Net Interest Income for 1HFY24.
Sharing the details further, the management of the bank highlighted that 68% of the bank's investment portfolio comprised of Pakistan Investment Bonds (PIBs), amounting to Rs2,605bn in floating-rate instruments.
The elevated interest rate environment has driven the overall yield on the investment portfolio to 20.55% for 1HCY24.
“NBP is focusing on increasing its lending activities, particularly in the agriculture sector in anticipation of the potential implications of the Asset-to-Deposit Ratio (ADR) tax,” the management said.
The management also seemed hopeful that it would achieve ADR within the 40% to 50% range by year-end.
On pension, the management informed that the bank recorded a one-time pension liability charge of Rs49 billion, with an anticipated recurring charge in the range of Rs8-10bn.
Though this pension obligation has been settled, the bank is addressing a separate issue where some employees are seeking federal employee status to benefit from federal pension increases.
“Based on prior rulings in similar cases, NBP is optimistic about a favourable outcome,” the management stated.
In response to dividend queries, the management clarified that as per the Bank Nationalization Act, NBP is permitted to declare dividends only at the year-end, subject to approval from both the Board of Directors and the State Bank of Pakistan (SBP).
It was also discussed that in July 2024, NBP successfully concluded the sale of its 45% stake in United National Bank Limited UK (UNBL UK), resulting in a gain of approximately Rs6bn, which will be reflected in the 3QCY24 financials.
On the technological front, NBP has significantly increased its investment in digital infrastructure, enhancing its core banking systems, expanding digital service offerings, and strengthening cybersecurity.
These initiatives have yielded positive results, with a notable 88% year-on-year increase in digital transactions, totalling 364 million.
The bank is planning to further expand its digital footprint by launching a credit card in CY25 and continues to revamp its branch network to improve customer experience, with 200 branches already upgraded and 650 ATMs planned for deployment across the country.
Management emphasized its continued focus on technological advancements and strategic IT investments over the past four years.
The bank has seen substantial growth in its digital banking segment, with the number of debit cardholders increasing to 2.6 million, accompanied by a 42% year-on-year rise in card-related fee income during 2QCY24.
It is also worth mentioning that the bank issued the Transmission Report alongside its financial results for the six months and second quarter ended June 30, 2024, on the same day.
No doubt, this timely release made investors pleased as it allowed them to analyze crucial information simultaneously for better understanding and informed decision-making.
During the quarter that ended on June 30, 2024, the bank recorded a loss of Rs8.98 [LPS: Rs4.28], compared to a profit of Rs15.84bn [EPS: Rs7.42] in the same period last year (SPLY).
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Posted on: 2024-09-03T12:53:15+05:00
