Poor Operational performance led Bank of Khyber profit to decline by 36%

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Poor Operational performance led Bank of Khyber profit to decline by 36%

  • Net Interest Income declined, while additional provisioning took a toll on Net Profit

Bank of Khyber (BoK) announced its Half Year 2019 Financial Result where it posted Net Profit of Rs. 492 million marking a 36% decline as compared to Rs. 776 million profit earned in the same period last year. The EPS stood at Rs. 0.5.

On a quarterly basis, Net Interest Income (NII) witnessed a decline of 8% as compared to last quarter due to decline in Gross Yield which diminished to just 22%, from 39% in the same quarter of last year. Moreover, the effective tax rate for IHCY19 stood at 21% as compared to 39% tax rate charged in the last year.

Poor Operational Performance

Bank of Khyber Net Interest Income has declined drastically in 2019 as Bank booked expansive Deposits, a phenomenon totally opposite to the banking sector trend.

Over the period, banks in Pakistan have reduced their cost of deposits and have increased their Current Deposits/Low-Cost deposits.

BoK also booked additional provisioning of Rs. 145 million during the half-year which resulted in a reduction in net profit.

During the half-year period, the bank experienced a 3% increase in Administrative expenses which led to pressure on Profit After Tax.

The PTI-Led Government of Khyber Pakhtunkhwa (GoKP) has major shareholding in BoK (70%), whereas, Ismail Industries led by Miftah Ismail has 24.2% shareholding.

Rupees in Million 1HCY19 1HCY18 %Change
Interest Earned 10,272 7,134 44%
Interest Expensed 7,810 4,343 80%
Net Interest Income 2,461 2,790 -12%
Non-Interest Income 352 370 -5%
Non-Mark-up Expenses 2,029 1,965 3%
Pre-Provision Profit 784 1,196 -34%
Provisions 145 -71 n.a
Profit before Tax 638 1,267 -50%
Tax 140 491 -71%
Profit After Tax 498 776 -36%
EPS (Rs.) 0.5 0.78

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