KARACHI: The Board of Directors of MCB Bank Limited (MCB) in its meeting under the Chairmanship of Mian Mohammad Mansha, on Wednesday, reviewed the performance of the Bank and approved the condensed interim financial statements for the first quarter ended March 31, 2024.
The Board of Directors has declared first interim cash dividend of Rs 9.0 per share i.e. 90 percent for the quarter ended March 31, 2024.
Through focused efforts of the Bank’s management in maintaining no-cost deposits base and optimizing its earning assets mix, MCB’s profit before tax (PBT) for the first quarter of 2024 increased to Rs 32.5 billion with an impressive growth of 41 percent. Profit after tax (PAT) posted a growth of 27 percent to reach Rs 16.6 billion; translating into earning per share (EPS) of Rs 13.97 compared to an EPS of Rs 11.02 reported in the corresponding period last year.
On the back of strong volumetric growth in average current deposits (+13% on a YoY basis) and timely repositioning within the asset book, net interest income for 1Q’24 increased by 27 percent over corresponding period last year.
Non-markup income increased to Rs 9.1 billion (+54%) against Rs 5.9 billion in the corresponding period last year with major contributions coming in from fee commission income of Rs 6.1 billion (+46%), income from dealing in foreign currency of Rs 1.9 billion (+97%) and dividend income of Rs 1.0 billion (+55%).
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 in income from fee commission; with trade and guarantee related business income growing by 100 percent, cards related income by 48 percent, branch banking customer fees by 17 percent and income from home remittance by 55 percent.
The Bank continues to manage an efficient operating expense base and monitor costs prudently. Amidst a persistently high inflationary environment, rapidly escalating commodity prices and continued investments in human resources and technological upgradation, the operating expenses of the Bank were reported at Rs 13.9 billion (+18%). The cost to income ratio of the Bank improved to 29.50 percent from 32.77 percent reported in the 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 55.4 billion as at March 31, 2024. The coverage and infection ratios of the Bank were reported at 92.67% and 8.56% respectively.
On the financial position side, the total asset base of the Bank was reported at Rs 2.41 trillion with nominal decrease of 1 percent over Dec 2023. Analysis of the assets mix highlights that net investments and gross advances have increased by Rs 39 billion (+3%) and Rs 25 billion (+4%) over December 31, 2023 respectively whereas Lending to Financial Institutions decreased by Rs 46 billion (-48%).
The Bank’s total deposits crossed Rs 1.85 trillion while the domestic market share improved to 6.05 percent compared to 5.92 percent as at December 31, 2023. The domestic cost of deposits was contained at 10.70 percent as compared to 7.15 percent in the corresponding period of last year despite the significant increase in average policy rate during the period.
Return on Assets and Return on Equity improved to 2.74 percent and 31.54 percent respectively, whereas the book value per share was reported at Rs 180.02.
During the period under review, MCB attracted home remittance inflows of USD 892 million (+13%) to consolidate its position as an active participant in SBP’s cause for improving flow of remittances into the country through banking channels.
While complying with the regulatory capital requirements, the Bank’s total Capital Adequacy Ratio (CAR) is 19.62 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 16.50 percent against the requirement of 6 percent. Bank’s capitalization also resulted in a Leverage Ratio of 6.5 percent which is well above the regulatory limit of 3.0 percent.
The Bank reported Liquidity Coverage Ratio (LCR) of 263.47 percent and Net Stable Funding Ratio (NSFR) of 160.47 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, 2024
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