The Board of Directors of MCB Bank Limited met under the
Chairmanship of Mian Mohammad Mansha, on October 17, 2019 to review the
performance of the Bank and approve the condensed interim financial statements
for the nine months ended September 30, 2019. The Board of Directors has
declared 3rd interim cash dividend of Rs. 4.0 per share i.e. 40% bringing the
total cash dividend for the year ending 2019 to 120%, continuing with its
highest in the industry dividend payout trend.
MCB reported profit before
tax of Rs. 27.51 billion which is 18% higher than the corresponding last period
and translated into earnings per share of Rs. 13.74 (2018: Rs. 12.08). The key highlights
of the performance were impressive increase in net interest margins through
gradual shift in the maturity profiling of investment base along with an
efficient cost base. Profit after tax (PAT) of the Bank increased by 14% to Rs.
16.29 billion as the bank recorded additional super tax @ 4% for the tax year
2018, as enacted through the Second Supplementary Finance Act, 2019. Effective
tax rate for the nine months ended September 30, 2019 came to 41% which is 2%
higher than the corresponding last period.
Net interest income increased to Rs. 42.99 billion, 27% higher
than corresponding last period. Volumetric growth in average earning assets,
particularly investments, along with effective mix of shorter maturity earning assets in a rising interest rate
scenario enabled the Bank to post growth
in gross mark-up income of Rs. 39.52 billion, up 67% over corresponding last
period. The Bank has been riding the yield curve over the last few years,
taking the benefit of the significant interest rate hike despite the fact that
interests on deposits are repriced earlier than the earning assets.
The non-markup income block of the Bank was reported at Rs. 11.45
billion with major contributions coming in from fee commission and foreign
exchange income. Fees and commissions generated from core banking businesses
increased by 5% to Rs. 8.32 billion. Foreign exchange income increased by 26%
to Rs. 2.19 billion as a result of better leveraging of market opportunities.
Despite the inflationary surge during the period, (September-19
YoY CPI of 12.5%) and growth in the operational network and infrastructure, operating
expenses recorded an insignificant increase of 6% over corresponding last
period excluding pension fund cost.
The coverage and gross NPLs to advances ratios are 83.65% and 9.66%
respectively.
Total asset base of the Bank on unconsolidated basis was reported
at Rs. 1.58 trillion showing an increase of 6% over December 2018. Analysis of
the assets mix highlights that net investments have increased by Rs. 115.1
billion (+15%) whereas net advances have decreased by Rs. 13.3 billion over
December 31, 2018.
The deposit base of the Bank has registered a healthy increase of
Rs. 96.1 billion and stood at Rs. 1,145.14 billion, a growth of 9% over
December 2018. Focusing on its low cost deposit base, the Bank was able to increase
current deposits at the rate of 4% over December 2018, with overall CASA base
of approximately 91% which reflects the customer confidence and the inherent
value of a strong brand name.
The Bank on a consolidated basis is operating the 2nd
largest network of 1,560 branches in Pakistan. The Bank remains one of the
prime stocks traded in the Pakistani equity market with highest market
capitalization in the industry. The profitability and payout returns of the
Bank are one of the highest in the industry.
The Bank remains well capitalized with the Capital Adequacy Ratio at
18.15% against the requirement of 11.90% (including capital conservation buffer
of 1.90%). Quality of the capital is evident from Bank’s Common Equity Tier-1
(CET1) to total risk weighted assets ratio which comes to 16.17% against the
requirement of 6.00%. Bank’s capitalization also resulted in a leverage ratio
of 6.72% which is well above the regulatory limit of 3.0%. The Bank reported
Liquidity Coverage Ratio (LCR) of 195.68% and Net Stable Funding Ratio (NSFR)
of 145.45% against requirement of 100%.
The Bank enjoys highest local credit ratings of AAA / A1+
categories for long term and short term respectively, based on PACRA
notification dated June 27, 2019.