MCB Bank's profit before tax soars to Rs 40 billion

The Board of Directors of MCB Bank Limited met under the chairmanship of Mian Mohammad Mansha on Tuesday, to review the performance of the Bank and approved the financial statements for the year ended December 31, 2019. The Board of Directors has declared 4th cash dividend of Rs 5 per share i.e. 50 percent bringing the total cash dividend for the year ended 2019 to 170 percent, continuing with its highest dividend payout trend in commercial banks category.

MCB's profit before tax grew to Rs 40.10 billion which reflects a tremendous growth of 25 percent over 2018, despite the tough operating environment. The key highlights were impressive increase in net interest margins through gradual shift in the maturity profiling of investment base along with a more refined structure.

The strategic profiling of the investments based on the interest rate calls resulted in a gradual shift from shorter to longer term investments, thereby capitalizing on the significant interest rate movement during the year. Net interest income rose to Rs 59.62 billion, 30 percent higher than the last year on account of effective asset deployment of the low cost deposits.

Analysis of the interest earning assets highlights that income on advances increased by Rs 20.37 billion, primarily on account of increase in yield of 398bps. On the investment side, gross markup income increased by Rs 30.76 billion, due to increased average volume by Rs 66.61 billion and yield of 391bps. On the interest bearing liabilities side, the cost of deposits increased by 278bps over last year.

The non-markup income block of the Bank was reported at Rs 16.68 billion with major contributions coming in from fee commission and foreign exchange income. One of the major revenue line supplementing the fee growth was commission from Bancassurance, with MCB Bank Limited leading the new business generation in percentage terms.

Despite the inflationary surge during the year, growth in the operational network and constant investment in digital, cyber security and information technology related platforms, the operating expense growth was contained to an impressive 5 percent, as efficient cost management remains one of the key strengths for MCB Bank Limited. On the provision side, the bank reversed provision amounting to Rs 158 million on advances; whereas, the Bank recorded net charge of Rs 2.8 billion on equity portfolio in 2019. On the financial position side, the total asset base of the Bank on unconsolidated basis was reported at Rs 1.52 trillion depicting an increase of 1 percent over December 2018. Analysis of the asset mix highlights that net investments and advances are reported at Rs 748.77 and Rs 496.68 billion respectively.

The Non-performing loan base of the Bank recorded a marginal increase of Rs 469 million and was reported at Rs 49.42 billion. The coverage and infection ratios of the Bank were reported at 87.73 percent and 9.15 percent respectively.

On the liabilities side, the deposit base of the Bank registered a significant increase of Rs 95.73 billion (+9%) over December 2018.

Return on Assets and Return on Equity were reported at 1.59 percent and 16.84 percent respectively, whereas book value per share was reported at Rs 122.54.

While complying with the regulatory capital requirements, The Bank's total Capital Adequacy Ratio is 18.86 percent against the requirement of 12.50 percent (including capital conservation buffer of 2.50%). Quality of the capital is evident from Bank's Common Equity Tier-1 (CET1) to total risk weighted assets ratio which comes to 15.70 percent against the requirement of 6.00 percent. Bank's capitalization also resulted in a leverage ratio of 7.07 percent which is well above the regulatory limit of 3.0 percent. The Bank reported Liquidity Coverage Ratio (LCR) of 197.13 percent and Net Stable Funding Ratio (NSFR) of 140.67 percent against requirement of 100.

The Bank enjoys highest local credit ratings of AAA / A1+ categories for long term and short term respectively, based on PACRA notification dated June 27, 2019.