Half-Year Results: MCB Bank posts 14pc growth in profit before tax

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  • The bank maintains industry’s highest quarterly payout of Rs4 per share

The Board of Directors of MCB Bank Limited met under the chairmanship of Mian Mohammad Mansha on Wednesday to review the performance of the bank and approve the condensed interim financial statements for the six months ended June 30, 2019.

The BOD declared a 2nd interim cash dividend of Rs4.0 per share i.e. 40pc, bringing the total cash dividend for the year ending June 30, 2019, to 80pc, thus continuing with its highest dividend payout trend.

MCB reported a profit before tax of Rs18.25 billion, which is 14pc higher than the corresponding period of last year and translated into earnings per share of Rs9.01 (2018: Rs8.24). This was achieved through continuous improvement in the operating efficiencies along with improving margins based on the strategic positioning of the asset book.

Profit after tax (PAT) of the bank increased by 9pc to Rs10.68 billion as the bank recorded super tax at 4pc for the tax year 2018, as enacted through the Second Supplementary Act, 2019; resultantly, effective tax rate for the six months is reported at 42pc which is 3pc higher than the corresponding last period.

Net interest income increased to Rs27.80 billion, 23pc higher than corresponding last period. Volumetric growth in average earning assets, particularly advances, along with an effective mix of shorter maturity earning assets in a rising interest rate scenario, enabled the bank to post a higher gross mark-up income by Rs21.42 billion, up 57pc over corresponding last period.

In spite of volumetric growth in deposits with re-pricing upon each policy rate change, gross mark-up expense growth curtailed to Rs16.237 billion.

The non-markup income block of the bank was reported at Rs7.9 billion with major contributions coming in from fee commission and foreign exchange income. Fees and commissions generated from core banking businesses increased by 4pc to Rs5.6 billion. Foreign exchange income increased by 47pc to Rs1.7 billion as a result of better leveraging of market opportunities.

Notwithstanding significant inflationary pressures (June-19 YoY CPI of 8.9pc), overall administrative expenses increased by only 7pc over corresponding last period excluding pension fund cost. Variance includes the cost charged against the deposit protection premium amounting to Rs576 million, which was applicable from July 01, 2018; excluding the impact of deposit protection premium, the increase in operating cost was only 3.3pc.

As one of the key strengths of MCB Bank, the bank continued with its NPL recovery trajectory, thereby reversing provision against advances by Rs701 million in the first six months of 2019. The coverage and gross NPLs to advances ratio improved to 89.14pc and 8.64pc respectively.

Total asset base of the bank on an unconsolidated basis was reported at Rs1.57 trillion showing an increase of 5pc over December 2018. Analysis of the assets mix highlights that net investments have increased by Rs44.1 billion (+6pc) whereas advances have increased by Rs10.6 billion over December 31, 2018.

The bank remained ahead of the industry on the domestic deposits front, increasing its share to 7.65pc from 7.57pc as of December 2018. The deposit base of the bank has registered a healthy increase of Rs99.6 billion and stood at Rs1,148.6 billion, a growth of 9pc over December 2018.

Focusing on its low cost deposit base, the bank was able to increase current deposits at the rate of 9pc over December 2018, which reflects the customer confidence and the inherent value of a strong brand name.

 

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