MCB Bank shows impressive growth in 1QCY23; registers 46% increase in profit after tax

MCB Bank shows impressive growth in 1QCY23; registers 46% increase in profit after tax

MCB Bank has shown impressive growth in first quarter of calendar year 2023 and posted 46 percent rise in profit after tax.

According to a statement issued Thursday, profit after tax (PAT) posted a growth of 46 percent to reach Rs13 billion; translating into an Earning Per Share (EPS) of Rs 11.02 compared to EPS of Rs 7.52 reported in corresponding period last year.

With a strong build up in core earnings, MCB’s profit before tax (PBT) for the first quarter of 2023 increased to Rs 23 billion with an impressive growth of 54 percent.

The Board of Directors of MCB Bank Limited (MCB) in its meeting held under the Chairmanship of Mian Mohammad Mansha on April 27, 2023, reviewed the performance of the Bank and approved the condensed interim financial statements for the first quarter ended March 31, 2023. The Board of Directors has declared first interim cash dividend of Rs 6.0 per share i.e. 60 percent for the quarter ended March 31, 2023.

On the back of strong volumetric growth in current account and timely repositioning within the asset book, net interest income for 1Q’23 increased by 66 percent over corresponding period last year. YoY average current deposits of the Bank registered a remarkable growth of Rs. 178 billion (+31 percent).

Non-markup income increased to Rs. 5.9 billion (+3 percent) against Rs. 5.7 billion in the corresponding period last year with major contributions coming in from fee commission income. The Bank registered a growth of 27 percent in fee commission with income from trade and guarantee business up by 59 percent, cards related income up by 42 percent and income from home remittances up by 39 percent.

The Bank continues to manage an efficient operating expense base and manage costs prudently. Amidst an exceptionally persistent high-inflation, impact of sharp currency devaluation and rapidly escalating fuel and utility costs, the operating expenses of the Bank reported at Rs. 11.8 billion (+25 percent). The cost to income ratio of the Bank improved significantly to 32.77 percent from 39.65 percent reported in corresponding period last year.

Proactive monitoring and recovery efforts led to a net provision reversal of Rs. 293 million against non-performing loans (NPLs) 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 (NPLs) base of the Bank was reported at Rs. 55.3 billion. The Bank has not taken FSV benefit in calculation of specific provision against its non-performing loans (NPLs) base. The coverage and infection ratios of the Bank were reported at 81.88 percent and 7.87 percent, respectively.

On the financial position side, the total asset base of the Bank grew by 1.39 percent to Rs. 2.11 trillion. Analysis of the assets mix highlights that net investments and gross advances have decreased by Rs. 33 billion (-3 percent) and Rs. 95 billion (-12 percent) over December 31, 2022 respectively, whereas Lending to Financial Institutions increased by Rs. 71 billion (+140 percent).

The bank continued its focus on building no cost deposits, leading to a robust growth of Rs. 178 billion (YoY: +31 percent) in average current deposits. The average current to total deposits ratio improved to 51.2 percent in Q1-2023 from 40.1 percent in Q1-2022. The domestic cost of deposits was 7.15 percent as compared to 4.91 percent in the corresponding period of last year due to the exceptional increase in interest rates during the period.

Return on Assets and Return on Equity significantly improved to 2.49 percent and 29.63 percent respectively, whereas the book value per share was reported at Rs. 153.29.

During the period under review, MCB attracted home remittance inflows of USD 786 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 of last year.

While complying with the regulatory capital requirements, the Bank’s total Capital Adequacy Ratio (CAR) is 18.01 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 15.94 percent against the requirement of 6 percent. Bank’s capitalization also resulted in a Leverage Ratio of 6.15 percent which is well above the regulatory limit of 3.0 percent. The Bank reported Liquidity Coverage Ratio (LCR) of 245.14 percent and Net Stable Funding Ratio (NSFR) of 138.35 percent against requirement of 100 percent.

Pakistan Credit Rating Agency re-affirmed credit ratings of MCB at “AAA” and “A1+” for long term and short term respectively, through its notification dated June 23, 2022.

The Bank, on a consolidated basis, is operating the 2nd largest network of more than 1,600 branches in Pakistan. The Bank remains one of the prime stocks traded in the Pakistani equity market with 2nd highest market capitalization in the industry.

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