Bank­ing in­dus­try’s prof­its soars by 24pc in 9 months

Ma­jor banks post com­bined net profit af­ter tax of Rs 75.0bn

The Pak Banker - - Front Page -

The bank­ing sec­tor’s to­tal net profit has once again in­creased to Rs 93.7 bil­lion in nine months dur­ing 2012 against profit of Rs 75.5 bil­lion in the cor­re­spond­ing pe­riod of 2011.

An­a­lysts at­tached their pref­er­ence to the larger banks with a se­lec­tive lik­ing for United Bank Lim­ited, Bank Alflaha and Na­tional Bank of Pak­istan.

The big six banks hav­ing as­sets ap­prox­i­mately Rs 400 bil­lion posted com­bined net profit af­ter tax of Rs 75.0 bil­lion in nine months of 2012, up 17 per­cent and ac­count­ing for 80 per­cent of listed com­mer­cial bank prof­its.

The ag­gre­gated prof­its in three quar­ters of 2012 have reached Rs 30.8 bil­lion, down 2.0 per­cent on quar­terly ba­sis on an uptick in pro­vi­sions with cov­er­age lev­els likely to have inched up. Net In­ter­est In­come (NII) sur­pris­ingly re­mained flat se­quen­tially with bal­ance sheet growth coun­ter­ing some Net In­ter­est Mar­gins (NIM) com­pres­sion. With non-in­ter­est in­come re­main­ing largely un­changed on a quar­terly ba­sis, it ap­pears banks are keep­ing cap­i­tal gains in stock for util­i­sa­tion across the next quar­ter and first half of cal­en­dar year 2013, par­tic­u­larly if NII starts to come off, an­a­lysts said.

All listed banks will round off 2012 on a strong note with po­ten­tial to sus­tain earn­ings in 2013 even if in­ter­est rates re­main close to sin­gle digit.

The 10 medium banks with as­sets vary from Rs 100 bil­lion to Rs 400 bil­lion posted com­bined profit of Rs 16.4 bil­lion in nine months of 2012, up a strong 31 per­cent. The growth was broad-based with NII up 10 per­cent on yearly ba­sis, pro­vi­sions lower by 32 per­cent and non­in­ter­est in­come up 22 per­cent.

The six small banks with as­sets rang­ing from Rs 100 bil­lion posted com­bined profit of Rs 2.3 bil­lion in nine month of 2012 ver­sus a com­bined loss of Rs 1.0 bil­lion in the cor­re­spond­ing pe­riod of pervi­ous year.

The smaller banks continue to be plagued by rel­a­tively weak cap­i­tal strength, low cov­er­age lev­els and lack of scale ef­fi­cien­cies. How­ever, NII has done well – up 33 per­cent YoY in 9MCY12 and 12 per­cent QoQ in 3Q 2012.

All banks have posted strong re­sults in third quar­ter of 2012 even as NIMs have come off due to mone­tary eas­ing. De­spite NIM com­pres­sion con­cerns amidst as­set re-pric­ing and po­ten­tial cuts in the dis­count rates.

While NII came off by 3 per­cent on yearly ba­sis, the earn­ings growth in nine months of cal­en­dar year 2012 has been driven by a 41 per­cent yearly ba­sis re­duc­tion in to­tal pro­vi­sions and a 34 per­cent in­crease in non-in­ter­est in­come. In the third quar­ter of 2012, com­bined big six prof­its clocked in at Rs 24 bil­lion, down 5.0 per­cent on quar­terly ba­sis on lower NII (tighter NIMs) even as to­tal pro­vi­sions came off by 8.0 per­cent on quar­terly ba­sis.

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