National Bank of Pakistan (the bank) was incorporated in Pakistan under the National Bank of Pakistan Ordinance,1949 and is listed on all the stock exchanges in Pakistan. The bank is engaged in providing commercial banking and related services in Pakistan and overseas. The bank also handles treasury transactions for the Government of Pakistan (GoP) as an agent to the State Bank of Pakistan (SBP). The bank also provides services as trustee to National Investment Trust (NIT), Long-Term Credit Fund (LTCF) and Endowment Fund for student loans scheme.
Registered Office
NBP Building, I.I. Chundrigar Road
Karachi, Pakistan.
Website
http://www.nbp.com.pk
Key Financial and Operating data: (As of June 2011)
Total Assets: 1,045,175,697,000
Net Assets: 126,452,155,000
No. of Ordinary Shares (As of June 2011): 1,681,829,000
Net Assets per Share: RS 75.20
No. of Branches: 1289
Profit or Loss per Share (Half Year Ended June 2011): Rs 4.81
Market Price per Share (As of 16/11/2011): Rs 44.50
Credit Rating As of June 2011
Ratings By JCR-VIS
Short Term: A-1+
Long Term: AAA
Income Analysis:
Net spread income during the period 2005-09 showed a declining trend. The growth rate in net spread income remains 48% during the year 2005 and fell to 4% in year 2009. However this trend has reversed in 2010. The net spread income shows how well the banks interest rate management performed. There is declining trend in income per share during the period 2006-10. The income per share remained Rs.24 in year 2006 whereas it declined to Rs.13 in year 2010.
Return and Efficiency:
The bank returned a healthy profit on its net assets amounting to 30% in year 2005; however, it declined during the period 2005-10. The return to net assets remained 15% in year 2010. The bank managed to earn a lucrative 6% interest spread income on its deposits. It also managed to keep its administrative expenses well below its spread income on its deposits.
Risk, Liquidity and Depth of Banking Operations:
The bank's risk profile remained mediocre. Its ratio of total assets to the net assets hovered around 8; which seems to be low. The bank’s asset profile is volatile, with non-consistent allocation to investment portfolio as compared to its loan portfolio. Recently, owing to the higher proportion of liquid investments as compared to the ill-liquid loan portfolio, the banks liquidity has increased. Greater proportion of investment in liquid asset may imply a higher level of illiquidity and risk of loan portfolio. Historically, the bank’s ability and willingness to extend loan was above average.
Conclusion:
Overall financial performance of the bank remained un-interesting. The bank needs to reduce its holding of low yield government securities and increase its lending business. The bank’s leverage is lower and it can increase leverage to increase its earnings.
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