KARACHI, March 18: The financial results and dividend announced by National Bank of Pakistan (NBP) on Friday, were generally in line with analysts’ expectations of earning per share (eps) somewhere over Rs12; the actual came out at Rs12.68 per share. For the past three years, the bank had been distributing cash dividend at Rs1.25 per share and most analysts thought that cash payout might be maintained at that rate also for 2004. But the directors recommended increased cash dividend at Rs1.50 per share. All the investor excitement was, nonetheless, on whether the bank would or would not declare a bonus issue. Most people had factored that into the stock price. It was sometime afterwards that it occurred to them that since the bank’s paid-up capital was already Rs4.92 billion and authorized capital Rs5 billion, there was no room for continuation of past practice of declaring a stock bonus. But the bank found a way out so as not to disappoint shareholders, by recommending a conditional bonus at 20 per cent (same as last year). The NBP announcement said that the bonus issue is “subject to the approval of increase in the bank’s authorised capital from Rs5 billion to Rs7.5 billion as per the government’s Finance Division notification dated January 31, 2005, by the bank’s shareholders”. Annual general meeting (AGM) of shareholders would be held on April 27.

The financial results; improved cash dividend and almost certain bonus issue, however, could not support the price of NBP share at the stock market. The share opened at Rs152.95 and after fluctuating widely between high of Rs157.20 and low of Rs145.35, closed at the day’s lowest. Around 33 million shares came up for trading. At the Friday’s closing price of Rs145.35, the NBP stock is trading at a price-to-earnings (P/E) multiple of 11.4x, which is at substantial discount to the market multiple of around 15x. But the drop in stock price on Friday, seemed less on reasons and fundamentals and more on general slump of the market.

The bank announced profit after tax amounting to Rs6.243 billion, representing improvement of 48.9 per cent over taxed profit of Rs4.195 billion in the previous year. The 49 per cent bottom line growth was a result of combination of 13.4 per cent increase in net mark-up income to Rs14.4 billion, from Rs12.7 billion the year ago; 15.3 per cent rise in non mark-up income to Rs8.3 billion, from Rs7.2 billion and nearly a billion rupees decrease in provision against advances, investment and other assets to Rs1.7 billion from Rs2.7 billion last year.