Big banks’ non-performing loans increasing fast

May 01 2011

Source : The News International

LAHORE: Five largest Pakistani banks earned Rs105.81 billion pre-tax profit in 2010, but their non-performing loans continued to increase.

Barring MCB Bank, the increase in NPLs of these banks over the previous year was in double digits. The NPLs of MCB Bank increased by 5.62 percent, Habib Bank Limited (HBL) by 10.32 percent, Allied Bank Limited (ABL) by 14.78 percent, National Bank of Pakistan (NBP) by 22.16 percent and United Bank Limited (UBL) by 24.27 percent.

The data based on the annual reports of each of these banks reveals that NBP had, as on December 31, 2010, deposit base of Rs832.152 billion. It posted pre-tax profit of Rs24.415 billion.

MCB Bank, which had Rs437.372 billion in deposits, declared the highest pre-tax profit of Rs26.253 billion.

The second highest pre-tax earning of Rs25.057 billion was declared by HBL, which had deposit base of Rs832.152 billion. The pre-tax earning of UBL was Rs18.482 billion while its deposits as on December 31, 2010, stood at Rs698.785 billion.

ABL earned Rs11.530 billion before tax with deposits of Rs371.284 billion. These banks had deposits of Rs2,906 billion as on December 31, 2010, which was 56.75 percent of total deposits with the industry.

According to the central bank data, the largest bank in Pakistan is NBP with a market share of 15.42 percent in advances and 16.24 percent in deposits. It is followed by HBL with 13.55 percent share in advances and 14.07 percent in deposits. UBL is the third largest bank with market share of 10.55 percent in advances and 10.75 percent in deposits. MCB Bank commands 7.85 percent share in advances and 8.42 percent in deposits.

The market share of ABL is 7.69 percent in advances and 7.25 percent in deposits. In earnings per share, MCB Bank topped with Rs22.20 followed by HBL at Rs15.58, NBP at Rs13.05, ABL at Rs10.52 and UBL at Rs9.12. MCB paid cash dividend of 115 percent, NBP 75 percent, HBL 65 percent, UBL 50 percent and ABL 75 percent.

NBP issued 25 percent bonus shares while HBL, MCB Bank and ABL issued bonus shares of 10 percent each. ABL did not issue any bonus share.

Muhammad Ashraf, former Senior Vice President of Allied Bank of Pakistan, said that MCB Bank opened 85 new branches in past two years including 51 in 2010. ABL came next with 40 new branches in two years with 27 opened in 2010. He said NBP opened 14 branches during this period. UBL opened four branches in two years. HBL closed 14 branches in 2009 and opened seven in 2010.

He said MCB Bank and ABL have the lowest average administrative expenses of Rs14 million per branch compared with Rs15 million for HBL, Rs16 million for UBL and Rs20 million for NBP.