LAHORE: The MCB Bank Limited (MCB) Board of Directors (BoD) in its meeting under the chairmanship of Mian Mohammad Mansha, on April 20, reviewed the performance of the bank and approved the condensed interim financial statements for the first quarter ended March 31, 2021.
The board has declared first interim cash dividend of Rs4.5 per share, continuing with its highest dividend payout trend.
During the period under review, MCB continued with its strategic focus on generating sustainable stakeholder value, while proactively monitoring the resurgence in Covid-19 outbreak and its potential ramifications on the macroeconomic and operating environment.
MCB’s unconsolidated Profit After Tax (PAT) for the three month period ended March 31, 2021 increased to Rs6.79 billion; translating into an Earning Per Share (EPS) of Rs5.73 against an EPS of Rs5.50 in corresponding period last year. Net interest income reported at Rs15.24 billion with a drop of 6.5 per cent on account of decreased earning margins due to the expansionary monetary policy regime adopted by the State Bank of Pakistan (SBP) to combat the downside risks emanating from Covid-19 outbreak.
Non-markup income registered an increase of 22pc to reach Rs4.75 billion as the improving transactional volumes and surging business activities supplemented a growth of 17pc in fee income while dividend income increased by 86pc over corresponding period last year.
On the operating expenses side, excluding pension fund reversal, despite sustained inflationary pressures, expansion in branch outreach, continued investment in technological infrastructure and regular performance and merit adjustments of the human capital, the bank’s focus of balancing short term tactical cost reductions with long term cost initiatives assisted in containing the growth in administrative expenses to 5pc.
On the provision front, the bank reversed provision on disposal of equity scrips, resulting in a net reversal of Rs570 million for the first quarter 2021. Based on the objective and subjective downgrades, net provision amounting to Rs444 was made against advances.
On the financial position side, the total asset base of the Bank on an unconsolidated basis was reported at Rs1.77 trillion. Analysis of the asset mix highlights that the net investments increased by Rs75 billion (7.4pc) whereas the gross advances decreased by Rs33 billion (-6.5pc) over December 2020. However, consumer lending book grew by Rs2.2 billion (+8pc) in the first quarter 2021.
Persistent focus on maintaining a robust risk management framework encompassing structured assessment models, effective pre-disbursement evaluation tools and an array of post disbursement monitoring systems has enabled MCB to effectively manage its credit risk. The non-performing loan (NPLs) base of the Bank hence recorded a marginal increase of 1.2pc over December 2020 to report at Rs51.8 billion. The Bank has not taken FSV benefit in calculation of specific provision and carries un-encumbered general provision reserve of Rs4.06 billion. The coverage and infection ratios of the Bank were reported at 98.1pc and 10.8pc respectively.
On the liabilities side, achieving growth in zero-cost and low-cost deposits remained a key strategic objective for the Bank. Thereby, non-remunerative deposits grew by 7pc to close at Rs521.76 billion; improving their mix in the total deposits to 40pc as at March 31, 2021 compared to 38pc as at December 31, 2020. CASA mix improved to 93.1pc whereas the total deposits of the bank grew by 2pc against a subdued industry growth of 0.17pc to close the period at Rs1.31 trillion.
Return on Assets and Return on Equity reported at 1.54pc and 17.35pc respectively, whereas the book value per share was reported at Rs127.16.
While complying with the regulatory capital requirements, the bank’s total Capital Adequacy Ratio (CAR) is 20.11pc against the requirement of 11.5pc including capital conservation buffer of 1.50pc as reduced under the BPRD Circular Letter No. 12 of 2020. Quality of the capital is evident from bank’s Common Equity Tier-1 (CET1) to total risk weighted assets ratio which comes to 16.56pc against the requirement of 6pc.
The bank’s capitaliaation also resulted in a leverage ratio of 6.4pc which is well above the regulatory limit of 3.0pc. The bank reported Liquidity Coverage Ratio (LCR) of 249.67pc and Net Stable Funding Ratio (NSFR) of 188.19pc against requirement of 100pc.
MCB enjoys the highest local credit ratings of AAA/A1+ categories for long term and short term respectively, based on PACRA notification dated June 26, 2020.
