MCB Bank posts highest ever Rs51.989bn profit before tax for 2021

The Board of Directors of MCB Bank Limited (MCB) in its meeting under the Chairmanship of Mian Mohammad Mansha, on February 10, 2022, reviewed the performance of the bank and announced Rs51.989 billion in profit before tax for the year ended December 31, 2021. 

The Board of Directors has declared a final cash dividend of Rs5.0 per share i.e. 50 per cent bringing the total cash dividend for the year ended 2021 to 190 per cent, continuing with its highest dividend per share trend in the banking sector.

MCB’s Profit After Tax (PAT) for the year ended December 31, 2021, posted a growth of 6 per cent to reach Rs30.81 billion; translating into Earning Per Share (EPS) of Rs26 compared to EPS of Rs24.50 reported in last year.

Average policy rate registered a decline of 19 per cent (166bps) from an average of 8.95 per cent in last year to 7.29 per cent in current year. However, on account of strategically aligned growth in average current deposits and a balanced mix of earning assets, net interest income of the bank decreased by only 10 per cent, from Rs71.33 billion to Rs63.99 billion.

Non-markup income registered a growth of 11 per cent and aggregated to Rs20.1 billion against Rs18.1 billion last year. Improved transactional volumes, surge in business activities, diversification of revenue streams through continuous enrichment of bank’s product suite, investments towards digital transformation and an unrelenting focus on upholding the high service standards supplemented a growth of 14 per cent in fee income whereas dividend and foreign exchange incomes increased by 86 per cent and 48 per cent respectively.

The Bank continues to prudently manage its operating expenses with a moderate increase of 8 per cent, despite sustained inflationary pressures amid currency devaluation and rising commodity prices, higher compliance related regulatory charges, expansion in branch outreach and regular performance and merit adjustments of the human capital.

On the provision front, proactive monitoring and recovery efforts led to a net reversal of Rs910 million in specific provision maintained against non-performing loans (NPLs) while the general loss reserve of Rs4 billion created amid the uncertainty surrounding the Covid-19 outbreak was reversed, as the systematic risks surrounding the economic recovery have receded and the bank has created specific provision against exposures that reflected signs of financial distress.

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 recorded a decrease of Rs698 million and was reported at Rs50.49 billion.

The bank has not taken FSV benefit in calculation of specific provision and carries an un-encumbered general provision reserve of Rs636 million. The coverage and infection ratios of the bank were reported at 90.83 per cent and 7.94 per cent respectively.

On the financial position side, the total asset base of the Bank, on an unconsolidated basis, was reported at Rs1,970 billion (+12 per cent). The gross advances of the Bank registered historic growth of Rs122 billion (+24 per cent), above the industry growth, to close the year at Rs636 billion. The corporate lending book grew by Rs106 billion (31 per cent) whereas the consumer loan portfolio garnered significant interest and increased by Rs9.5 billion (32 per cent) on the back of significant activity in the construction and auto segments.

On the liabilities side, achieving growth in no-cost current account base remained a key strategic objective for the bank. Thereby, non-remunerative deposits grew by 15.1 per cent to close at Rs563 billion, improving their mix in the total deposits to 40 per cent in absolute terms as at December 31, 2021. CASA mix was reported at 93 per cent whereas the total deposits of the bank grew by 9 per cent to close out the year at Rs1,412 billion.

Return on Assets and Return on Equity reported at 1.65 per cent and 19.11 per cent respectively, whereas the book value per share was reported at Rs135.13.

During the year MCB attracted home remittance inflows of $3.527 billion to further consolidate its position as an active participant in SBP’s cause for improving flow of remittances into the country through banking channels. The inflow by MCB till Dec 31, 2021 under the Roshan Digital Account (RDA) initiative has stood at $216 million.

While complying with the regulatory capital requirements, the bank’s total Capital Adequacy Ratio (CAR) is 17.01 per cent against the requirement of 11.5 per cent (including capital conservation buffer of 1.50 per cent as reduced under the BPRD Circular Letter No. 12 of 2020). 

Quality of the capital is evident from the bank’s Common Equity Tier-1 (CET1) to total risk weighted assets ratio which comes to 15.08 per cent against the requirement of 6 per cent. 

Bank’s capitalization also resulted in a Leverage Ratio of 6.13 per cent which is well above the regulatory limit of 3 per cent. The bank reported Liquidity Coverage Ratio (LCR) of 246.31 per cent and Net Stable Funding Ratio (NSFR) of 155 per cent against requirement of 100 per cent.

The bank’s exceptional performance has also been recognized by the globally coveted Finance Asia’s Country Awards wherein it has been declared as the “Best Bank in Pakistan” in 2021.

The bank enjoys highest local credit ratings of AAA/ A1+ categories for long term and short term respectively, based on PACRA notification dated June 23, 2021.

The bank on consolidated basis is operating the second largest network of more than 1,600 branches in Pakistan. The Bank remains one of the prime stocks traded in the Pakistani equity market with second highest market capitalization in the industry.