The National Bank of Pakistan (NBP) announced unconsolidated profit after tax of Rs3.0bn (diluted EPS Rs1.42) in first quarter of current fiscal year as against Rs4.8bn (Rs2.24 per share) in 1Q2012. Decline in earnings is mainly comes from reduced NII (Net Interest Income) on the back of shrinking banking spreads. Reduced interest rates along with hike in cost of deposits are the factors behind the shrinking spreads. Compared to 1Q2012, interest income declined by 4 per cent to Rs 23.9bn while interest expense rose by 4 per cent to Rs 15.1, rendering into 14 per cent decline in NII to Rs 8.8bn. Further provisioning of Rs 1.2bn versus reversal of Rs 0.6bn in 1Q2012 and 15 per cent increase in non-markup expense to Rs 8.9bn also impacted the profits. However, 42 per cent up tick in non-markup income to Rs5.6bn provided some support. In sequential basis, interest income declined by 4 per cent while interest expense increased by 25 per cent. Resultantly, NII declined by 31 per cent from Rs12.8bn in 4Q2012. In addition, 30 per cent decline in non-markup income also dented the bottom line.
