The National Bank of Pakistan (NBP) has received a significant boost as the US Federal Reserve officially lifted sanctions imposed on the bank and its New York branch. The enforcement actions, which included the “Cease and Desist Order” issued on February 22, 2022, were formally terminated on December 2, 2024. Furthermore, the written agreement made between the Federal Reserve and NBP on March 14, 2016, was concluded on December 17, 2024. This move marks a positive development for the bank, strengthening its operational prospects and potentially boosting global confidence in NBP’s banking activities.
NBP’s management communicated this update to the Pakistan Stock Exchange (PSX), signaling the end of a turbulent chapter for the bank. The termination of these sanctions is expected to have a positive impact on NBP’s international dealings and growth potential. The bank has faced challenges in recent years, including reporting a significant consolidated loss of Rs 8.98 billion for the quarter ending June 30, 2024. This was a sharp reversal from the profit after tax of Rs 15.85 billion recorded in the same period of 2023.
The loss per share (LPS) for the second quarter of 2024 was Rs 4.28, down from earnings per share (EPS) of Rs 7.42 in the same quarter last year. This substantial loss was largely attributed to a Rs 49 billion pension expense incurred during the period, which significantly impacted the bank’s financial performance. Despite this setback, NBP did report some positive trends within its operations.
The bank saw an increase in its mark-up/return earned, which rose by nearly 20%, from Rs 240.05 billion in the second quarter of 2023 to Rs 287.7 billion in 2024. Its net mark-up/return earned also grew by 5%, reaching Rs 42.9 billion. Moreover, fee and commission income saw a 13% increase, reaching Rs 7.3 billion. However, foreign exchange income decreased by 23% to Rs 2.4 billion, reflecting challenges in that sector.
On the positive side, NBP recorded a substantial 152% increase in gains from securities, which amounted to Rs 1.4 billion, up from Rs 563 million in the same period of the previous year. The bank’s share of profit from joint ventures and associations also grew by 33%, totaling Rs 446.6 million. However, operating expenses for the bank increased by 19%, reaching Rs 27.7 billion. The loss before tax for the quarter stood at Rs 18.9 billion, a stark contrast to the profit before tax of Rs 15.8 billion reported in the same period in 2023.
In summary, the lifting of sanctions by the US Federal Reserve offers a positive outlook for NBP as it navigates through challenging financial results. The bank’s ability to recover from its recent losses and adapt to the changing economic landscape will be crucial in determining its future trajectory. With the conclusion of these sanctions, NBP is better positioned to strengthen its international operations and enhance its financial performance in the upcoming quarters.