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LAHORE: The Board of Directors of MCB Bank Limited (MCB) in its meeting under the Chairmanship of Mian Mohammad Mansha, on October 25, 2023, reviewed performance of the Bank and approved the interim financial statements for the nine months’ period ended September 30, 2023.

The Board of Directors has declared a 3rd interim cash dividend of Rs 8.0 per share i.e. 80 percent, in addition to 130 percent already paid, bringing the total cash dividend for the nine months period ended September 30, 2023 to 210 percent.

Through focused efforts of the Bank’s management in building no-cost deposits and optimizing its earning assets mix, MCB successfully sustained its growth momentum in core earnings to post historically high nine months Profit Before Tax (PBT) of Rs 88.1 billion; registering an impressive increase of 71 percent on a year-on-year basis.

The Profit After Tax (PAT) was recorded at Rs 44.1 billion (+122%) and translated into an Earning Per Share (EPS) of Rs 37.25 compared to an EPS of Rs 16.75 reported in the corresponding period last year.

Strong volumetric growth in current account and timely repositioning of the asset book resulted in a 73 percent increase in net interest income for the period under review as compared to corresponding period last year.

Non-markup income increased to Rs 22.6 billion (+12%) against Rs 20.3 billion in the corresponding period last year with major contributions coming in from fee commission income (Rs 14.2 billion), income from dealing in foreign currency (Rs 5.9 billion) and dividend income (Rs 2.0 billion).

Improving customer and interbank flows, diversification of revenue streams through continuous enrichment of service suite, investments towards digital transformation and an unrelenting focus on upholding high standards of service delivery supplemented a broad-based growth of 38 percent in income from fee commission; with trade and guarantee related business income growing by 95 percent, cards related income by 48 percent, branch banking customer fees by 12 percent and income from home remittance by 18 percent.

The Bank continues to manage an efficient operating expense base and monitor costs prudently. Amidst a persistently high inflationary environment, currency devaluation, rapidly escalating commodity prices and continued investments in human resources and technological upgradation, the operating expenses of the Bank were reported at Rs 37.4 billion (+23%). The cost to income ratio of the Bank improved significantly to 29 percent from 37 percent reported in corresponding period last year.

Navigating a challenging operating and macroeconomic environment, the Bank has been addressing asset quality issues by maintaining discipline in management of its risk return decisions. Diversification of the loan book across customer segments and a robust credit underwriting framework that encompasses 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 was reported at Rs 54.6 billion as at September 30, 2023. The coverage and infection ratios of the Bank were reported at 82.86 percent and 8.45 percent respectively.

On the financial position side, the total asset base of the Bank grew by 15 percent and was reported at Rs 2.39 trillion. Analysis of the assets mix highlights that net investments increased by Rs 279 billion (+29%) whereas gross advances reported a decrease of Rs 151 billion (-19%) over December 31, 2022.

The Bank continued its focus on building no cost deposits, leading to a robust growth of Rs 190 billion (YoY: +30%) in average current deposits. The average current to total deposits ratio improved to 51.5 percent during the period under review from 41.3 percent in corresponding period last year.

Despite the exceptional increase in interest rates during the period, the domestic cost of deposits was contained at 8.63 percent as compared to 6.21 percent in the corresponding period last year.

Return on Assets and Return on Equity significantly improved to 2.63 percent and 31.84 percent respectively, whereas the book value per share was reported at Rs 167.81.

During the period under review, MCB attracted home remittance inflows of $2,369 million to further consolidate its position as an active participant in SBP’s cause for improving flow of remittances into the country through banking channels; with market share improving to 12.3 percent compared to 11.4 percent in the corresponding period last year.

While complying with the regulatory capital requirements, the Bank’s total Capital Adequacy Ratio (CAR) is 20.26 percent against the requirement of 11.5 percent (including capital conservation buffer of 1.50 percent 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 17.74 percent against the requirement of 6 percent. Bank’s capitalization also resulted in a Leverage Ratio of 6.05 percent which is well above the regulatory limit of 3.0 percent.

The Bank reported Liquidity Coverage Ratio (LCR) of 246.89 percent and Net Stable Funding Ratio (NSFR) of 150.03 percent against requirement of 100 percent.

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, 2023.

Copyright Business Recorder, 2023

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