• Despite higher Revenues, Bank posted lower profit against the Industry Trend

The Bank of Punjab (BOP) announced its 9MCY20 results today where the bank reported Net Profit of PKR5.8billion (EPS: PkR2.17) as against PKR6.1billion (EPS: PKR2.33) in the same period last year.

Gross yield improved marginally to 28.5%, due to high yielding bonds.

Bank continues to rely on capital gains to spur its non-funded income, recording PKR3.5bn in gains in 3QCY20 – a scale similar to the previous quarter. Total non-funded contribution in total income remains ~46%.

Cost to income ratio jumps to 41.4% in 3QCY20 vs. 38.7% in the previous quarter. 

Main drag on the earnings was due to higher provisioning booked during the quarter. BoP has booked PKR 2.375 billion in provisioning during the quarter, while total Provisionings stand at PKR 5.8 Billion during the year (an unprecedentedly higher level). As per market check, BoP is doing some Subjective provisioning against some problematic clients in the portfolio.

Based on the Lower Interest Rate scenario and absence of one-off Capital Gains, earnings are set to decline sequentially going onwards. While further downside risk exists in the form of any additional provisioning.

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