The National Bank of Pakistan (NBP) announced 9M2013 unconsolidated earning per share of Rs 2.94. This EPS, the Topline analysts believe, is down 50 percent as compared to Rs 5.91 in the same period last year. Analysis reveals that 170 percent rise in provisions against NPLs causes the decline, said Zeeshan Afzal of Topline Research.
In an effort to have adequate provisions against portfolio risk, the bank recorded general provisions of Rs 4.0 billion in 3Q2013 making total general provisions of Rs 6.8b in 9 months.
Further hit to the profits was provided by low banking spread scenario which averaged 6.26 percent in 9M2013 vs 7.14 percent in 9M2012. During the period, NII declined by 8.3 percent to Rs 28.3 billion.
Alone in 3Q2013, the NBP posted EPS of Rs 0.11 which is significantly lower than the EPS of Rs1.4 in 2Q2013. Some 26 percent QoQ decline in NII to Rs 8.3 billion and 64 percent QoQ decline in gain on sale of securities to Rs 633 million caused the reduction. However, some support to the earnings was provided by reversal of Rs 1.1 billion on provisions against diminution in investments vs expense of Rs 275 million in last quarter. On yearly basis, the NBP earnings declined by 95 percent from Rs 2.05 in 3Q2012.
