KARACHI, Sept 15: State-run National Bank managed to post a pre-tax profit of Rs3.518 billion in six months ending June 30, 2003 up 53 per cent from the pre-tax profit of Rs2.288 billion the same period last year.

The NBP board of directors approved its half yearly accounts at a meeting held at the bank headquarters here on Saturday.

According to a press release the earnings per share jumped to Rs4.71 in six months to June 2003 from Rs2.76 during the same period of last year.

Despite the lower interest rate environment the bank managed to increase its net interest margin by Rs997 million. Non mark-up income showed a significant improvement and was up by 36 per cent over that of last year. The deposits of the bank also rose by over Rs20 billion from the level seen in December 2002.

“Despite substantial reduction in commodity loans and repayment of some large public sector loans, the bank booked fresh loans mainly in top tier corporate which partially compensated reduction in advances,” says the press release.

The board of directors of the bank has noted that the drastic drop in the treasury bills rate as well as a very appreciable reduction in loan pricing will have a negative impact on net interest revenue in the next six months — i.e. between July- December 2003.

But senior bankers say banks net interest earnings would also depend on how quickly they position themselves in advances market after receiving signals of T-bills rate stability from the State Bank. The central bank has already sent a couple of strong signals that T-bills rates have not only bottomed out but are set to rise. In fact the three-month and one-year T-bills rates have already went up by 31 and 57 basis points this months and a 40- 50bps increase is likely in the six-month T-bills rates this week.

“Maybe the bank (NBP) is able to cope up with the challenge in a better way and our net interest revenue either does not fall or fall marginally in six-months to December 2003,” said a senior NBP official. He admitted that a couple of recent market-based moves by the SBP has lessened the fears about falling interest revenue but hastened to add “much would depend on credit offtake and the level of liquidity in the system.”