The Board of Directors of MCB Bank Limited (MCB) in its meeting under the Chairmanship of Mian Mohammad Mansha, on October 26, 2022, reviewed the performance of the Bank and approved the interim financial statements for the nine months period ended September 30, 2022. The Board of Directors has declared a 3rd interim cash dividend of Rs. 5.0 per share i.e. 50%, in addition to 90% already paid, bringing the total cash dividend for the nine months period ended September 30, 2022 to 140%.
With strong build up in core earnings, MCB’s Profit Before Tax (PBT) for the nine months period ended September 30, 2022 increased to Rs. 51.6 billion against PBT of Rs. 38.3 billion of corresponding period last year. On the back of strong overall performance, the Bank reported highest ever quarterly profit before tax of Rs. 19.05 billlon in Q3 2022. Retrospective application of tax amendments along with higher tax rates for current period enacted through Finance Act, 2022 resulted into 62% average tax rate for the nine months ended September 30, 2022 as compared to average tax rate of 41% for the corresponding period last year. Profit After Tax (PAT) registered a decline of 12% from Rs. 22.6 billion to Rs. 19.9 billion; translating into Earning Per Share (EPS) of Rs. 16.75 compared to an EPS of Rs. 19.03 in corresponding period last year.
On the back of strong volumetric growth in current account and favourable yield curve movements, net interest income for nine months period ended September 2022 increased by 29% over corresponding period last year. Average current deposits of the Bank registered a growth of Rs. 91.6 billion (+17%) YoY.
Non-markup income registered a growth of 41% and reported a base of Rs. 20.25 billion against Rs. 14.38 billion in the corresponding period last year. The contribution from foreign exchange line, debit cards, trade business and home remittances remained strong during the period.
Despite exceptionally high inflation, impact of currency devaluation and continued investments in human resources, branch network and technological upgradation, operating expenses of the Bank were recorded at Rs. 30.52 billion, growing by a modest 16% year on year, while the cost to income ratio significantly improved to 37.3% from 42.5% reported in corresponding period last year.
Proactive monitoring and recovery efforts led to a net provision reversal against non-performing loans (NPLs) which aggregated to Rs. 1,883 million for the period under review. 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 (NPL) base of the Bank was reported at Rs. 52.47 billion. The Bank has not taken FSV benefit in calculation of specific provision against its NPLs. The coverage and infection ratios of the Bank were reported at 85.14% and 8.37%, respectively.
On the financial position side, the total asset base of the Bank grew by 5.4% and was reported at Rs. 2,076 billion. Gross advances registered a slight decline of Rs. 9 billion (-1%), whereas the consumer lending book grew by Rs. 4.8 billion (+12%).
During the period under review, MCB’s strategic objective of achieving growth in no-cost current account base was reinforced by an uncertain and volatile interest rate scenario, leading to persistent re-pricing gaps between the earning assets and liabilities. Hence, the Bank registered a growth of 21% in non-remunerative deposits to close the period at Rs. 680.33 billion. CASA mix was reported at an industry leading level of 93.73% which reflects customer loyalty earned by the Bank over 75 years through sustained provision of quality services.
MCB attracted home remittance inflows of USD 2,666 million, during the period under review with market share of 11.5% as an active participant in SBP’s cause for improving flow of remittances into the country through banking channels.
During the ongoing year, the Bank celebrates successful completion of 75 years of its banking services to the nation. From modest beginnings, the Bank has transformed into a dynamic and innovative organization; overcoming a multitude of challenges along the way with resolve and fortitude. Recognition by the globally coveted Asia Money awards as ‘Pakistan’s Best Corporate Bank of the Year’ in 2022 is a testament to its legacy of posting consistent and exceptional performance for its stakeholders.
While complying with the regulatory capital requirements, the Bank’s total Capital Adequacy Ratio (CAR) is 17.6% against the requirement of 11.5% (including capital conservation buffer of 1.50% 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 16.47% against the requirement of 6%. Bank’s capitalization also resulted in a Leverage Ratio of 5.62% which is well above the regulatory limit of 3.0%. The Bank reported Liquidity Coverage Ratio (LCR) of 203.85% and Net Stable Funding Ratio (NSFR) of 134.66% against requirement of 100%.
Pakistan Credit Rating Agency re-affirmed credit ratings of MCB at “AAA / A1+” for long term and short term respectively, through its notification dated June 23, 2022.
The Bank on consolidated basis is operating the 2nd largest network of more than 1,600 branches in Pakistan and remains one of the prime stocks traded in the Pakistani equity market, with 2nd highest market capitalization in the industry.
