NBP Profits Drop 91% in First 9 Months of 2024
- Sara Habib
- October 30, 2024
- 4:43 pm
- 30
- Business
National Bank of Pakistan (NBP) recently released its earnings report, showing a decline in the third quarter of 2024. Earnings were at Rs. 2.96 billion, a significant 76% drop from last year. Though earnings improved slightly from the previous quarter’s loss of Rs. 9.1 billion, they marked a steep fall. Year-to-date, NBP has reported Rs. 3.5 billion in earnings, a 91% decrease from last year. This declining trend is primarily due to lower net interest income, as highlighted by Arif Habib Limited (AHL) in their analysis.
Sharp Drop in Net Interest Income
NBP’s net interest income for 3QCY24 stood at Rs. 33.6 billion, reflecting a 29% decline from last year. Quarter-on-quarter, net interest income fell by 22%. This drop stemmed from reduced income and slight decreases in expenses. Specifically, interest expenses fell by 4.5% YoY and 2.9% QoQ, while interest income dropped by 8.5% YoY and 5.7% QoQ. Such decreases in key revenue sources have impacted the bank's overall earnings, showcasing the effects of current market challenges on NBP's core income streams.
Increase in Non-Funded Income Helps Balance
Despite the challenges, NBP’s non-funded income surged by 94.8% in 3QCY24, helping offset other declines. By the end of 9MCY24, non-funded income totaled Rs. 40.8 billion, showing a 47.3% year-on-year growth. Key contributors included a 19.3% rise in fee income and a significant increase in foreign exchange earnings, reaching Rs. 5.4 billion. Additionally, gains from securities sales soared, adding Rs. 10.5 billion to the bank’s revenues, marking a remarkable 331% YoY growth.
Higher Operating and Provisioning Costs Impact Profits
Operating expenses rose by 19% YoY, totaling Rs. 79.5 billion for 9MCY24, up by 34.9% YoY in 3QCY24 alone. These rising expenses pushed the bank’s cost-to-income ratio to 62.8%, compared to 40% in the same period last year. A noteworthy provision charge of Rs. 2.9 billion was also recorded, although the total for 9MCY24 decreased to Rs. 1.9 billion from Rs. 9.6 billion in the previous year.
The effective tax rate has also impacted profitability, rising to 78.6% in 3QCY24 from 46.9% last year due to asset-related charges. This higher tax rate has added to the challenges NBP faces in maintaining profitability.
The quarterly report shows the bank's struggle with lower earnings and highlights efforts to balance with non-funded income.
