MCB Bank reports 24pc growth in profit before tax

  • The bank declares an interim cash dividend of Rs4 per share for the 1st quarter of 2019

The Board of Directors of MCB Bank Limited met on Wednesday with Mian Mohammad Mansha in the chair to review the bank’s performance and approve the condensed interim financial statements for the first quarter ending March 31, 2019.

The bank has declared its first interim cash dividend of Rs4 per share for the quarter under review, continuing with its highest dividend payout trend.

The bank’s profit before tax (PBT) for the three-month period increased by 24pc to Rs9.08 billion. The effective tax rate for the quarter increased to 44pc primarily on account of super tax at 4pc recorded for the tax year 2018, as enacted through the Second Supplementary Act, 2019.

Based on the interest rate calls, the shorter term maturity profiling of the asset base enabled the bank to leverage the significant interest rate hike. As a result, the net interest income increased by an impressive 22pc over the corresponding period of last year.

The non-markup income block of the bank was reported at Rs3.5 billion with major contributions coming in from fee line under credit, guarantees and remittance segments.

On the operating expenses side, despite the surge in inflationary pressures, the bank was able to contain the growth percentage to 12pc. The increase included the deposit protection premium cost amounting to Rs288 million, which was made applicable from July 01, 2018. Excluding the impact of deposit protection premium, the increase in operating cost was only 8.31pc.

The bank continued with its recovery trajectory of classified portfolio and reversed provision amounting to Rs405 million on advances whereas reversal of Rs26 million was recorded on equity portfolio in the first quarter of 2019.

The bank remained ahead of the industry on the domestic deposits front, increasing its share to 7.66pc from 7.57pc as of December 2018. Based on the weekly averages, the domestic deposit base of MCB grew by 1pc as opposed to a decline of 2pc reported by the industry.

Focusing on its low cost deposit base, the bank was able to add 150,000 new accounts during the first quarter of 2019, which reflects the customer confidence and the inherent value of a strong brand name.

The bank on a consolidated basis is operating the 2nd largest network of 1,550 branches in Pakistan. This includes 176 Islamic banking branches of its wholly-owned Islamic banking subsidiary. The bank remains one of the prime stocks traded in the Pakistani equity markets with the highest market capitalization in the industry.

The bank remains well capitalized as the Capital Adequacy Ratio is 17.82pc against the requirement of 11.90pc (including capital conservation buffer of 1.90pc). Quality of the capital is evident from the bank’s Common Equity Tier-1 (CET1) to total risk-weighted assets ratio which comes to 15.72pc against the requirement of 6.00pc. the bank’s capitalization also resulted in a leverage ratio of 7.28pc which is well above the regulatory limit of 3.0pc. It reported a Liquidity Coverage Ratio (LCR) of 195.96pc and Net Stable Funding Ratio (NSFR) of 132.20pc against the requirement of 100pc.

The bank enjoys the highest local credit ratings of AAA / A1+ categories for long-term and short-term respectively, based on PACRA notification dated June 27, 2018.

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