Treasure Magazine

Treasure Magazine

MCB Bank posts 24% growth in profit before tax in first quarter 2019

3 min read

The bank declares an interim cash dividend of Rs4 per share for the 1st quarter of 2019

KARACHI: The MCB bank’s profit before tax (PBT) increased by 24 per cent to Rs 9.08 billion in January-March period of the current year.

The Board of Directors of MCB Bank Limited chaired by Mian Mohammad Mansha Wednesday reviewed the bank’s performance and approve the condensed interim financial statements for the first quarter ending March 31, 2019.

According to the statement of the bank, it has declared its first interim cash dividend of Rs 4 per share for the quarter under review, continuing with its highest dividend payout trend.

The bank’s profit before tax (PBT) for the three-month period increased by 24 per cent to Rs 9.08 billion. The effective tax rate for the quarter increased to 44 per cent primarily on account of super tax at 4 per cent recorded for the tax year 2018, as enacted through the Second Supplementary Act, 2019.

Based on the interest rate calls, the shorter term maturity profiling of the asset base enabled the bank to leverage the significant interest rate hike. As a result, the net interest income increased by an impressive 22 per cent over the corresponding period of last year.

The non-markup income block of the bank was reported at Rs 3.5 billion with major contributions coming in from fee line under credit, guarantees and remittance segments.

On the operating expenses side, despite the surge in inflationary pressures, the bank was able to contain the growth percentage to 12 per cent. The increase included the deposit protection premium cost amounting to Rs 288 million, which was made applicable from July 01, 2018. Excluding the impact of deposit protection premium, the increase in operating cost was only 8.31 per cent.

The bank continued with its recovery trajectory of classified portfolio and reversed provision amounting to Rs 405 million on advances whereas reversal of Rs 26 million was recorded on equity portfolio in the first quarter of 2019.

The bank remained ahead of the industry on the domestic deposits front, increasing its share to 7.66 per cent from 7.57 per cent as of December 2018. Based on the weekly averages, the domestic deposit base of MCB grew by 1pc as opposed to a decline of 2 per cent reported by the industry.

Focusing on its low cost deposit base, the bank was able to add 150,000 new accounts during the first quarter of 2019, 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 1,550 branches in Pakistan. This includes 176 Islamic banking branches of its wholly-owned Islamic banking subsidiary. The bank remains one of the prime stocks traded in the Pakistani equity markets with the highest market capitalization in the industry.

The bank remains well capitalized as the Capital Adequacy Ratio is 17.82% against the requirement of 11.90% (including capital conservation buffer of 1.90%). Quality of the capital is evident from the bank’s Common Equity Tier-1 (CET1) to total risk-weighted assets ratio which comes to 15.72% against the requirement of 6.00%. the bank’s capitalization also resulted in a leverage ratio of 7.28% which is well above the regulatory limit of 3.0%. It reported a Liquidity Coverage Ratio (LCR) of 195.96% and Net Stable Funding Ratio (NSFR) of 132.20% against the requirement of 100%.

The bank enjoys the highest local credit ratings of AAA / A1+ categories for long-term and short-term respectively, based on PACRA notification dated June 27, 2018.

 

About The Author

Copyright © All rights reserved. | Treasure Magazine