MCB Bank expects an estimated Rs7.5 billion impact on its bottom line, although lower merchant discount rates could offset part of the hit.
KARACHI: The withdrawal of incentives under the Pakistan Remittance Initiative (PRI) could have an estimated Rs75 billion impact on Pakistan’s banking sector, with MCB Bank expecting a hit of around Rs7.5 billion to its bottom line, according to the bank’s corporate briefing held on Wednesday.
MCB Bank management said the estimated industry-wide impact would stem from the end of the PRI incentives scheme. Based on its share of the remittance market, MCB expects to absorb around Rs7.5 billion of the impact.
However, the bank said 25% to 30% of the potential impact could be offset through a relaxation in the merchant discount rate (MDR) by the State Bank of Pakistan (SBP).
MCB remittance market share declines
MCB Bank’s share of Pakistan’s home remittance market fell to 10.38% in June 2026, compared with 10.9% in December 2025.
Management identified changes to the remittance incentive framework as one of the key factors that could affect the bank’s future earnings outlook.
The potential impact comes as banks assess the implications of changes to the incentives available for facilitating remittance inflows through formal channels.
Deposits rise 15% to Rs2.6 trillion
Meanwhile, MCB reported strong growth in its deposit base during the first half of 2026.
Total deposits increased 15% from December 2025 to Rs2.6 trillion by June 2026. The bank expects to add a further Rs200 billion to Rs250 billion in deposits during the second half of the year.
For 2027, management expects deposit growth of around 15%, broadly in line with anticipated industry growth.
Current account deposits increased by Rs224 billion during the first half of 2026 to Rs1.4 trillion. Their share of total deposits rose to 55% in June from 54% in December 2025.
The bank said it intends to maintain the current account contribution at around 55%.
Investment portfolio reaches Rs2.1 trillion
MCB’s investment portfolio increased from Rs2.0 trillion in December 2025 to Rs2.1 trillion in June 2026, while portfolio yield rose to 12.86% from 11.63% in June 2025.
Fixed-rate Pakistan Investment Bonds (PIBs) accounted for 24% of the portfolio, while floating-rate PIBs represented 56%.
The yield on the fixed-rate portfolio stood at 12.52%, with a weighted average maturity of 1.99 years. The average spread on floating-rate PIBs remained at 108 basis points.
Management said around half of the floating-rate portfolio had reset during the second quarter of 2025, while the remaining portion is scheduled for repricing in the second half of 2026. The repricing is expected to provide support to net interest margins.
MCB plans 27 more branches
MCB maintained its domestic branch network at 1,413 branches after adding 13 branches during the first half of 2026.
The bank plans to open another 27 branches during the second half of the year.
Operating expenses increased by 9% in the first half, mainly because of higher employee compensation following annual salary increments and the addition of 1,880 employees, largely to strengthen its retail field force.
Consequently, the bank’s cost-to-income ratio increased to 39% in H1CY26 from 38% in the corresponding period of 2025.
Management said it is targeting a cost-to-income ratio below 40%.
Capital position remains strong
MCB’s Capital Adequacy Ratio (CAR) stood at 19.6% in June 2026, compared with 19.5% in December 2025, remaining significantly above the regulatory requirement of 11.5%.
The bank said it maintains a capital buffer of 8.15%, providing a substantial cushion against regulatory and balance-sheet risks.
Management also said it does not expect any change in the policy rate in the near term.
The corporate briefing covered MCB’s financial performance during the second quarter of 2026 and its outlook for the remainder of the year, with the potential impact of changes to the PRI incentive framework emerging as a key concern for the bank and the wider banking sector.