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In continuation of National Bank of Pakistan journey for embracing the future banking, the bank has inked a deal with one of the world's most distinguished card brands MasterCard. The Bank is cognizant of the future banking needs and the management of the Bank has embarked upon many technology steps aimed towards provision of multiple delivery channels; and this deal is part of the journey of offering best in class products.

The signing with MasterCard was a significant milestone for NBP, as it will further offer NBP account holders choice of leading card schemes based on their unique transactional requirements.

The experts calculated that the National Bank of Pakistan performed satisfactorily during Q1-2016. Improvement remained very much evident in all strategic and functional areas/regions.

For the quarter, the Bank registered pre-tax profit of Rs6.2 billion which is 23 percent higher from Rs5.0 billion for the same period previous year. Similarly, after-tax profit also rose by 23 percent as the corresponding amounted Rs4.0 billion as against to Rs3.3 billion for the corresponding period last year. Earnings per share (EPS) for 3-month closed March 2016 are Rs1.90 as compared to Rs1.54 of previous year. Pre-tax and after-tax return on equity reach at 22.6 percent and 14.8 percent respectively; whereas pre-tax and after tax return on assets are at 1.5 percent and 1.0 percent respectively.

Although discount rate declined by 200bps compared those prevailing in Q1-2015, net interest income rose from Rs10.6 billion in Q1-2015 to Rs12.0 billion during Q1-2016 reflecting a rise of 14 percent. Improvement was chiefly achieved through 20 percent reduction in mark-up/interest expense that amounts to Rs15.0 billion as against Rs18.7 billion for the same quarter of 2015.

Non-performing GoP guaranteed loans continue to drag on profitability and have impacted on Bank's interest income significantly. Non mark-up/interest income declined by 23 percent to Rs6.5 billion as against to Rs8.5 billion for Q1-2015.

The drop is chiefly attributed to the lower gains generated from sale of securities that declined by 58 percent at Rs1.5 billion as against to Rs3.5 billion generated during the corresponding Q1-2015.

Exchange income from dealing in foreign currencies declined by 32 percent to Rs995 million because of competitive market conditions.

Administrative expenses rose by Rs796 million chiefly because of yearly increments and other inflationary rises. Total non-performing loans (NPLs) recorded marginal rise of 5.7 percent; of which significant portion pertains to the 'OAEM' and 'Substandard' categories because of delinquencies in seasonal financing in line with past trends.

It is predicted that the same will be regularized by the end of Q2-2016. However, provision charge against the NPL was significantly lower at Rs1.06 billion against Rs3.05 billion in Q1-2015. Compared to March 2015, deposits rose by 12 percent to Rs1,274 billion as compared to Rs1,136 billion on March 31, 2015.

As the Bank continued to sustain an optimal asset portfolio, net investments rose by 41 percent as against to the same quarter of 2015; whereas QoQ growth compared to December, 2015 remained at 3.0 percent.

Net advances have, however, down by 3.8 percent from December 2015 chiefly because of adjustments in seasonal financing.

National Bank of Pakistan is well capitalized with capital and reserves of Rs153.6 billion translating into per share breakup value of Rs72/.

Movement in the capital and reserves during the quarter is because of appropriation of profit for final cash dividend.

During the quarter the bank continued with its attempts to further grow their market outreach. With a total local network of 1,403 branches, NBP's Islamic banking branch network now stands expanded to 82 branches in major cities throughout Pakistan.

The Bank's business processing has become more efficient as the management has achieved roll-out of Core Banking Application (CBA) on their entire branch network and deployed allied systems like SAP Financial, SAP HR and KONDOR+.

This has also enhanced the Bank's operational efficiency and would enable the bank to launch technology-based products.

The Bank's ATM network has now risen to 1,150 plus machines with 6 ATM centers. Installation of another 400 biometric capable ATMs is in progress and is predicted to be completed by 2016. To improve fee based income, the bank is all set to cash on alternate delivery channels and services like internet banking, mobile banking, cash management, cards and remittances.

The Bank is also in the process of evaluating further growth opportunities like cash and cheque deposit machines, card less transactions, inter-branch and inter-bank fund transfers by ATMs. NBP corporate lending for 2017 is to tap in on the rising LSM growth and the opportunity generated by the China-Pakistan Economic Corridor (CPEC).

NBP is all set to capitalize on the CPEC opportunities, and is setting up a China and Far-East Trade Desk on a fast-track basis.
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Publication:Pakistan & Gulf Economist
Date:Jan 8, 2017

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