NBP Profit Down by Whopping 91% in 9 Months of 2024

NBP announced its 3QCY24 earnings at Rs. 2.96 billion (EPS: Rs. 1.39), marking a significant 76 percent decline YoY, though up from the previous quarter’s loss of Rs. 9.1 billion. For 9MCY24, total earnings amounted to Rs. 3.5 billion, marking a 91 percent YoY decrease. In the outgoing quarter, the YoY decline in profitability was primarily driven by lower net interest income, according to Arif Habib Limited (AHL). The bank’s Net Interest Income totaled Rs. 33.6 billion for 3QCY24, reflecting a 29 percent YoY decline and a 22 percent QoQ decline. Interest expenses fell by 4.5 percent YoY and 2.9 percent QoQ, while interest income dropped by 8.5 percent YoY and 5.7 percent QoQ. The bank’s Non-Funded Income surged by 94.8 percent YoY in 3QCY24, bringing the 9MCY24 total to Rs. 40.8 billion – a 47.3 percent YoY increase. This growth in 9MCY24 was mainly driven by a 19.3 percent YoY rise in fee income, reaching Rs. 19.6 billion, along with a substantial increase in foreign exchange income, which rose to Rs. 5.4 billion from Rs. 2.8 billion in the same period last year. Additionally, the bank recorded a gain of Rs. 10.5 billion from the sale of securities, up 331 percent YoY. A provisioning charge of Rs. 2.9 billion was recorded in the outgoing quarter, bringing the total provisioning charge for 9MCY24 to Rs. 1.9 billion, compared to Rs. 9.6 billion in 9MCY23. To recall, the bank also recognized an extraordinary item – pension charge of Rs. 49 billion in 9MCY24. The bank’s OPEX rose by 19 percent YoY in 9MCY24, reaching Rs. 79.5 billion (3QCY24: Rs. 29.3 billion, up 34.9 percent YoY and 6 percent QoQ). With this, the Cost/Income ratio increased to 62.8 percent in 3QCY24, compared to 40 percent in the same period last year. The effective tax rate also jumped to 78.6 percent in 3QCY24 from 46.9 percent SPLY, likely due to ADR-related charges.