The Bank reported an operating profit of Rs. 25.468 billion, marginally higher than last year, despite lockdown in the country and the 625 bps drop in policy rate during the year. Subjective provisioning and general provision buildup against advances contained profit after tax at Rs. 10.475 billion, which translates into earnings per share of Rs. 5.89 (2019: Rs. 7.15).
A wide range of policy interventions were enacted by the central bank and the government to provide impetus to the economy. Under these schemes, banks were allowed to defer / restructure principal and markup. Accordingly, the Bank deferred / restructured loans with principal over Rs. 52 billion and consequently, it has taken a general provision of Rs. 4.250 billion against borrowers availing such relaxations. Also, the Bank has provided over Rs. 30 billion of fresh loans backed by SBP refinance scheme (wages and salaries, combating covid and temporary economic relief finance) to over 300 entities.
Total deposits and gross advances were reported at Rs. 881.767 billion and Rs. 600.899 billion, growing by 12.7% and 13.4% respectively. Gross advances to deposits ratio stood at 68.1%. CASA ratio improved to 79.8%, while the current account mix reached a high of 46.6%. We continued to support our credit clients throughout this challenging period. The Bank has non-performing advances of Rs. 25.860 billion and the NPL ratio stands at 4.3%. Provision coverage ratio increased to 91.2% at year end.
Net markup income was Rs. 44.705 billion, flat versus the prior-year, with the impact of lower rates and certain Covid related actions offset by balance sheet growth and a favourable asset-liability mix. Non-markup revenue was Rs. 12.795 billion, up by 23.5%, with sizable contribution from capital gains on government securities. Fee and commission income remained muted due to lower transaction volumes, revenue recognition in line with IFRS 15 which requires deferral of fee income over the contract period and regulatory waivers of branch and digital banking fees.
Non-markup expense was Rs. 32.032 billion, with growth contained at 7.3%. The main cost drivers were higher staff costs, IT support and maintenance fee, and the full year impact of new branches opened last year, along with the overall impact of inflation. Thus the cost to income ratio of the Bank was reported at 54.7%, slightly higher than last year.
The Bank has raised Rs. 11 billion through Medium Term Note (MTN). Out of Rs. 11 billion, Rs. 9 billion was offered to and subscribed by pre-IPO investors, while Rs. 2 billion was offered to the general public. The IPO was successful with oversubscription of the general public portion. The primary purpose of the MTN is to hedge the Bank’s fixed rate assets.
The Board of Directors, in its meeting, has declared final cash dividend of Rs. 2.0 per share, subject to the approval of shareholders in the AGM. This is in addition to an interim cash dividend of Rs. 2.0 per share paid during the year.
At the close of the year, the Bank remained adequately capitalized with CAR at 16.53%.
The CEO commenting on the results said, “Looking ahead, we see wide-ranging opportunities for growth in core operating profit. We believe our digital platforms and widespread branch network, backed by our robust deposit franchise, prudent risk management practices and strong capital base, put us in a position to grow sustainably.”