Policy easing takes toll on NBP, HBL profits

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The Habib Bank Limited (HBL) and National Bank of Pakistan (NBP) are due to announce their respective financial results for 1HCY13 today (Thursday).

According to a report issued on Wednesday by InvestCap Research, the NBP was expected to register a massive decline of 29 percent YoY in its bottomline, the profit after tax tumbling down to Rs 5.858 billion (EPS Rs3.17).

“The expected decline is led by declining interest income down by 3 percent YoY to Rs 48.352 billion due to decline in discount rate and escalating interest expense upon savings rate being paid on average balance, hiked by 5 percent YoY to Rs 30.360 billion,” viewed the report.

The bank’s net interest income is expected to plunge by 15 percent YoY to 17.991 billion as a result. Factors favouring the bottomline are 40 percent YoY decline in provisions and a 15 percent YoY augmentation in non-interest income.

Whereas the factor posing negativity was 19 percent YoY increase in non-markup expense. For the quarter, NBP is expected to post an EPS of Rs1.53 in 2QCY13, 7 percent QoQ decline. Whereas the net interest income is expected to increase by 4 percent QoQ, provisions to fall by 35 percent QoQ and non-interest income to amplify by 15 percent QoQ, a 21 percent QoQ increase in net interest expense is expected to negate all, resulting in a 7 percent QoQ decline in bottomline.

The HBL is expected to post PAT of Rs 9.190 billion in 1HCY13, translating into an EPS of Rs 6.89. The expected bottomline is 16 percent lower than Rs10.987 billion posted last year. “The decline is expected despite a 17 percent YoY augmentation in interest income, however, the same is anticipated to be more than nullified by a 46 percent YoY increase in interest expense resulting in a 9 percent YoY decline in net interest income,” said the report. Provisions of the bank are expected to ascend by 12 percent YoY in 1HCY13.

In 2QCY13, HBL is expected to register a mere 1 percent QoQ increase in bottomline, posting an EPS of Rs 3.46 led by declining provisions (down by 8 percent QoQ ) and increased non-interest income (up by 4 percent QoQ).

“Along with the results, we expect HBL to declare Rs 3.5 dividend per share,” said the report.