Karachi: The National Bank of Pakistan (NBP) held an analyst briefing to discuss its financial performance for the first half of 2024, outlining challenges and strategic responses amidst a significant pension liability resolution. The bank reported a notable decrease in profit after tax to PKR 251 million, heavily influenced by a PKR 49 billion expense related to pension settlements. This fiscal strain was somewhat offset by a robust growth in interest-bearing assets and substantial capital gains.
According to AKD Securities Limited, the NBP management provided insights into the bank’s operational adjustments and strategic initiatives following the finality of the pension case, which led to substantial payouts. The bank’s income growth of 5.1% year-over-year was supported by a 13.8% increase in interest-bearing assets and an improved yield on investments. However, the bank’s operating costs surged by 11.8% due to inflationary pressures and investments in IT infrastructure, affecting the cost to income ratio, which rose to 50.7%.
The bank has been proactive in upgrading its digital infrastructure, spending PKR 3.7 billion in the first half of 2024 alone, totaling PKR 21.8 billion since 2020. These advancements have yielded a significant increase in digital transactions, which grew by 88% year-over-year.
Despite the challenges, NBP’s deposit base grew by PKR 429 billion during the period, with a substantial portion in current deposits, enhancing its CASA mix to 80%. The investment book also saw a healthy increase, primarily in treasury bills and Pakistan Investment Bonds, accompanied by profitable capital gains from its equity portfolio.
Looking ahead, the bank anticipates additional capital gains from the sale of its stake in UNBL-UK and is navigating the new regulatory landscapes with adjustments in capital adequacy ratios following the implementation of IFRS-9. The briefing also highlighted the bank’s ongoing litigation in a pension-related matter, with a hearing scheduled for October 15, 2024, where the bank remains optimistic about a favorable outcome.