MCB Bank Limited (PSX: MCB) reported a 17.78% year-on-year decline in profit attributable to equity shareholders for the first quarter ended March 31, 2025, despite steady non-markup income growth and a generous dividend payout. The bank posted a net profit of Rs14.65 billion (EPS: Rs12.36), compared to Rs17.82 billion (EPS: Rs15.04) in the same period last year.
The bank also declared an interim cash dividend of Rs9 per share—equivalent to 90%—which helped support investor sentiment despite the earnings miss. Following the announcement, MCB’s share price climbed by 0.42% to close at Rs286.67 on the Pakistan Stock Exchange. During the trading day, it touched an intraday high of Rs294, reflecting an initially stronger reaction before moderating.
The decline in net earnings was largely driven by a 4.80% drop in total income, which fell to Rs49.58 billion, as the bank experienced a 22.36% slump in mark-up or interest income, totalling Rs77.99 billion. Although interest expenses also declined significantly—down 33.13% to Rs38.92 billion—this wasn’t enough to offset the revenue drop. As a result, net interest income fell by 7.52% to Rs39.07 billion.
Non-markup income, however, remained a bright spot, increasing by 9.10% to Rs10.5 billion. Gains came from multiple streams, including a 93.91% jump in dividend income, 22.39% rise in foreign exchange income, and a 45.65% surge in other income. Fee and commission income grew slightly by 0.27%. However, the bank recorded a net loss on securities of Rs139.66 million, reflecting some volatility in its investment portfolio.
Cost pressures were evident across the board. Total non-markup expenses rose sharply by 21.42% to Rs20.85 billion, with core operating costs increasing 23.47%. The spike in provisioning was even more pronounced—credit loss allowances and write-offs surged over 8,244%, amounting to Rs2.33 billion, suggesting either a one-off hit or heightened caution in the loan book. Nevertheless, other charges and Workers Welfare Fund expenses saw a sharp decline of 50.76% and 10.49%, respectively.
MCB’s share of profit from associates grew by 18.35% to Rs492.95 million, slightly offsetting some of the bottom-line pressure. Profit before tax dropped 10.74% year-on-year to Rs31.55 billion, and after-tax profit stood at Rs14.65 billion, with a relatively moderate 3.87% decline in tax expense. However, a significant 142.87% increase in non-controlling interest further weighed on profits attributable to equity shareholders.
Despite the headline earnings decline, investors appeared to find comfort in the consistent dividend policy and the resilience in non-markup income. The initial rally in MCB’s share price—briefly reaching Rs294—suggests the market may have priced in the weaker results in advance or is optimistic about forward-looking profitability, especially if interest margins improve or credit provisioning stabilises.
