National Bank of Pakistan (NBP): 3Q2018EPS of Rs1.6, -44% YoY (-54% QoQ); (Below expectations)
- National Bank of Pakistan (NBP) announced PAT of Rs3.5bn, (EPS Rs1.6, down 44% YoY), lower than expectations. On a quarterly basis, net interest income (NII) fell by 16% QoQ and non-interest income declined by 23% QoQ, contrary to expectations.
- We believe the decline in NII is due to differences in the timing at which assets and liabilities are re-priced where assets take longer to re-price compared to liabilities, hence putting downward pressure on NII for the immediate period following the rate hike. To recall, interest rates rose by 50bps in Jul 2018.
- NII increased by 9% YoY to Rs13.5bn as the bank benefited from rising interest rates as well as expanding asset base. Consequently, markup interest earned increased by 24% YoY whereas markup interest expense was up 34% YoY.
- NBP booked a provision charge of Rs2.0bn vs. provision reversal of Rs1.8bn in the same period last year. The charge mainly pertains to NPL provisioning of Rs1.8bn.
- Non-interest income of the bank was down 3% YoY to Rs7.5bn as a result of 9% decline in fee income and 66% decline in capital gain on securities. However, 8x increase in income from dealing in FX supported non-interest income.
- In 9M2018, earnings of the bank clocked in at Rs7.6/share, up 10% YoY due to 13% higher NII. We attribute this growth to monetary tightening and asset growth.
- Key risks for the bank include 1) deterioration in Pakistan macros, 2) uptick in provisioning charge, & 3) lower than expected rate hike.
National Bank of Pakistan (the Bank) is a Pakistan-based commercial bank. The Bank provides commercial banking services, including commercial loans, investment advisory, asset management, global remittances, agency services, forex, leasing, modarba, underwriting, brokerage, and other banking and financial services. The Bank offers retail products, which include saving deposits, current deposits, housing finance, personal loans and agricultural loans; transaction banking services, which include cash management, trade finance and services, and remittance management; Corporate Finance services, which include deposits, structured corporate finance, capital advisory, investment advisory and trade finance; Treasury services, which include forex and financial derivatives, and government to person (G2P) services, which include pension payments, tax and fee collection, and other payments. The Bank serves its customers in over 20 countries.
Topline Securities is one of the fastest-growing brokerage houses in Pakistan. It has strong Equity Brokerage, Economic/ Equity Research, Commodity Trading and Corporate Finance & Advisory functions.
Topline Securities has been endowed with numerous awards by renowned international financial organizations. The highlights of which consists of the award for ‘Best Local Brokerage House of Pakistan’ by Asiamoney Brokers Poll (the largest Asia-focused equity services provider poll) in 2016 and ‘Best Equity Brokerage House’ by CFA Society Pakistan in 2015.
Previously, Topline Securities held the title for ‘Best Brokerage House’ for 4 consecutive years (2011-2014) by Asiamoney Brokers Poll. Other awards include the ‘Best Salesperson’ award by Asiamoney for 6 consecutive years (2011-2016), the ‘Arabia Fast Growth 500’ award and ‘Pakistan Fast Growth 100’ award in 2012 and 2013 by AllWorld Network.
JCR-VIS, a credit rating agency providing independent rating services in Pakistan has assigned initial rating of “A-2” for short term and “A” for long term to Topline Securities. Topline Securities is registered as Underwriter, Book Runner and Research Entity with Securities & Exchange Commission of Pakistan (SECP).
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