The Bank of Punjab (BoP)

Dear Clients,

The Bank of Punjab (BoP) held its conference call today to discuss financial performance of CY20 and company outlook going forward.

Key Highlights

– The Bank of Punjab (BoP) reported CY20 Profit after Tax (PAT) of PkR6.9bn (EPS: PkR2.63), down 16% Y/Y.

– BoP’s CAR improved to 16.2% as opposed to 14.8% in corresponding period last year. This would provide adequate cushion to absorb the impact of IFRS 9 implementation.

– As per the management, the implementation of IFRS 9 would be in a phased manner and there would be no substantial impact whenever it is implemented as the bank is well positioned for it.

– During the year, BoP’s balance sheet grew by 26% and the management aims to increase it by 70% over the next 3yrs (2021-2023).

– The bank’s deposits increased to PkR835bn and the market share clocked in at 4.5%. For CY21, the bank expects to achieve a growth of 22%.

– Advances posted a meagre growth of 3% during CY20 and is expected to register a growth of 12% in CY21.

– BoP’s prudent provisioning in CY20 contained the profitability that clocked in at PkR6.9bn. Out of this, general provisioning amounting to PkR3.3bn and specific provisioning of PkR4.8bn were recorded under the period under review. The subjective provisioning includes the impact of IFRS 9 implementation as well.

– With regards to PM housing scheme and Kamyab Jawan program, the bank is amongst the top financing banks. For Kamyab Jawan scheme, the funds have crossed PkR 2bn and 40% of the risk is covered by the federal government. On the other hand, the disbursement of PM low cost housing project is relatively slow paced and the bank is way ahead of its game in comparison to peers.

– Loans deferred under SBP’s COVID led scheme are PkR28bn that is almost 5% of the portfolio.

– The bank aims to improve its ranking from 9 to 7 in terms of customer deposits by CY23.

– With regards to implementation of TSA, the management highlighted that it is still in process and would take some time for finalization.

– Additionally, the bank has set a goal to increase ROE to 25% by Dec23 and enhance the Consumer Finance portfolio to 25% of asset’s portfolio.

– The bank plans to enhance its footprint both South and North region (especially Karachi and Peshawar) that would keep the OPEX on the higher side (however, in-line with average industry level) in coming years.

Regards,
KASB Research

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