National Bank of Pakistan (NBP) announced its earnings for the first nine months of 2024 (9MCY24), reporting a profit of Rs. 3.5 billion, reflecting a 91% decrease compared to the same period last year. However, this represents a recovery from the previous quarter’s loss of Rs. 9.1 billion.

According to Arif Habib Limited (AHL), the decline in profitability during the outgoing quarter was primarily driven by lower net interest income.

NBP’s Net Interest Income for 3QCY24 totaled Rs. 33.6 billion, showing a 29% YoY decline and a 22% quarter-on-quarter (QoQ) decline. Interest expenses decreased by 4.5% YoY and 2.9% QoQ, while interest income fell by 8.5% YoY and 5.7% QoQ.

Conversely, the bank’s Non-Funded Income surged by 94.8% YoY in 3QCY24, bringing the total for 9MCY24 to Rs. 40.8 billion, a 47.3% YoY increase. This growth was mainly driven by a 19.3% YoY rise in fee income, reaching Rs. 19.6 billion, and a substantial increase in foreign exchange income, which rose to Rs. 5.4 billion from Rs. 2.8 billion in the same period last year. Additionally, the bank recorded a gain of Rs. 10.5 billion from the sale of securities, up 331% YoY.

A provisioning charge of Rs. 2.9 billion was recorded in the outgoing quarter, bringing the total provisioning charge for 9MCY24 to Rs. 1.9 billion, compared to Rs. 9.6 billion in 9MCY23. The bank also recognized an extraordinary item—a pension charge of Rs. 49 billion in 9MCY24.

Operating expenses (OPEX) rose by 19% YoY in 9MCY24, reaching Rs. 79.5 billion. For 3QCY24, OPEX was Rs. 29.3 billion, up 34.9% YoY and 6% QoQ. Consequently, the cost-to-income ratio increased to 62.8% in 3QCY24, compared to 40% in the same period last year.

The effective tax rate also jumped to 78.6% in 3QCY24 from 46.9% in the same period last year, likely due to charges related to the Asset Development Ratio (ADR).