MCB Bank profits plunge 14.03pc to Rs31.01bn

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LAHORE: The Board of Directors of MCB Bank Limited, met under the Chairmanship of Mian Mohammad Mansha, on February 15, 2018, to review the performance of MCB and approve the financial statements for the year ended December 31, 2017.

During the year 2017, MCB completed the merger of NIB Bank Limited with and into MCB Bank Limited. The synergies from the merger were reflected in the financial numbers in NPL recoveries and deferred tax adjustment. On the financial performance side, MCB Bank Limited reported Profit before Tax (PBT) of Rs 31.01 billion and Profit after Tax (PAT) of Rs 22.46 billion. In comparison with the last year, Profit before Tax has decreased by 14.03 per cent whereas Profit after Tax has increased by 2.59 per cent on account of reversal of prior year tax charges.

Net markup income of MCB was reported at Rs 42.41 billion, down by 3.21 per cent over last year owing to the maturity of high yielding bonds and low-interest rate environment. On the gross markup income side, MCB reported an increase of Rs 6.69 billion whereas, on the interest expense side, MCB registered an increase of Rs 8.09 billion over last year. To supplement its net interest margins, MCB remained focused on increasing its low-cost deposit base and venture in higher-yielding assets.

On the non-markup income front, MCB reported a base of Rs 17.96 billion with the growth of 11 per cent over last year despite significant capital market volatility in the later half of the year. Major contributions to non-markup income growth were operational in nature with fees and commissions increasing by 22.44 per cent YoY and income from dealing in foreign currencies increasing by 42.93 per cent YoY.

The administrative expense base (excluding pension fund reversal) recorded an increase of 23.62 per cent over last year mainly on account of amalgamation of NIB Bank Limited (NIB) with and into MCB Bank Limited. On the provision against advances front, MCB continued with its recovery trajectory and posted a significant reversal of Rs 2.90 billion. Based on the volatility in the equity markets, net impairment on equity investments was recorded to the tune of Rs 3.57 billion.

The total asset base of MCB on a standalone basis was reported at Rs 1.33 trillion reflecting a healthy increase of 26.19 per cent over December 2016. Analysis of the asset mix highlights that net investments have increased by Rs 101.04 billion (+18.17 per cent) with net advances increasing by Rs 121.24 billion (+34.83 per cent) over December 31, 2016. The coverage and infection ratios of MCB were reported at 93.74 per cent and 9.47 per cent respectively.

On the liabilities side, the deposit base of MCB registered a splendid increase of Rs 187.05 billion (+23.94 per cent) over December 2016, including Rs 61 billion contributions from Ex-NIB Bank Limited. The significant increase in deposits resulted in MCB achieving an all-time high deposit base of Rs 968 billion on standalone basis with deposits crossing Rs 1 trillion mark on a consolidated basis. MCB Bank Limited continued to enjoy one of the highest CASA mixes in MCBing industry of 92.86 per cent with current deposits increasing by 27 per cent and savings deposits by 19 per cent over December 2016. Strategic focus on current accounts resulted in an increase in concentration level to 38.94 per cent of the total deposit base. Earnings per share (EPS) for the year was Rs 19.56 as compared to Rs 19.67 for 2016. Return on Assets and Return on Equity were reported at 1.89 per cent and 17.65 per cent respectively, whereas book value per share stood at Rs 115.18.

MCB remained a well-capitalised institution with a capital base well above the regulatory limits and Basel capital requirements. While complying with the regulatory capital requirements, MCB has the highest cash dividend per share in the industry with regular interim dividends and remains one of the prime stocks traded in the Pakistani equity markets reflected by the highest market capitalization in the financial institution category as at December 31, 2017. Bank’s total Capital Adequacy Ratio is 16.44 per cent against the requirement of 11.275 per cent (including capital conservation buffer of 1.275 per cent). Quality of the capital is evident from Bank’s Common Equity Tier-1 (CET1) to total risk-weighted assets ratio which comes to 14.42 per cent against the requirement of 6.00 per cent. Bank’s well capitalisation also resulted in a leverage ratio of 7.67 per cent which is well above the regulatory limit of 3.0 per cent. MCB reported Liquidity Coverage Ratio (LCR) of 194.13 per cent and Net Stable Funding Ratio (NSFR) of 128.80 per cent against the requirement of 90 per cent and 100 per cent respectively.

MCB enjoys highest local credit ratings of AAA / A1+ categories for the long term and short term respectively, based on PACRA notification dated June 19, 2017. Moreover, TFC rating of MCB Bank Limited (Ex-NIB) has been upgraded from A+ to AAA, based on the notification from PACRA dated October 06, 2017.

MCB has filed a petition in the Lahore High Court for demerger of 90 branches from MCB and its merger into wholly owned subsidiary MCB Islamic Bank Limited.

The Board of Directors declared final cash dividend of Rs 4.0 per share for the year ended December 31, 2017, which is in addition to Rs 12.0 per share interim dividends already paid to shareholders