MCB Bank Limited (Muslim Commercial Bank Limited until July 31, 2005), a banking company incorporated in Pakistan, is engaged in commercial banking and related services. MCB Bank is listed on all the stock exchanges in the country and has two wholly-owned subsidiaries, MNET Services (Private) Limited and Muslim Commercial Financial Services (Private) Limited.
The present overview of financial statements, however, is that of MCB Bank alone, without consolidation with its subsidiary companies. PACRA has assigned long term credit rating of AA (double AA) and short term credit rating of A1+(A one plus) to MCB Bank.
MCB Bank has a network of 940 branches inside Pakistan and five overseas branches. Of the total branches, Punjab has 57%, Sindh 21%, NWFP 19% and Balochistan has 3%. MCB Bank shares are distributed among 47,201 shareholders. The directors and associated companies hold 31 % shares; Banks, DFIs, etc own 38 % shares while the rest 31% shares are with general public.
MCB Bank's Total Assets of Rs 300 billion on June 30, 2005 show an increase of 16% compared to Rs 259 billion as on December 31, 2004. Major increase (45%) was seen in Investments which rose to Rs 98 billion (33% of total assets) as on June 30, 2005 compared to Rs 67 billion (26% of total assets) as on December 31, 2004.
Advances (Net) increased by only 14 % to Rs 156 billion (52% of total assets) as on June 30, 2005, compared to Rs 137 billion (53% of total assets) as on December 31, 2004. Composition of Investments and Net Advances in relative terms is given below.
=============================================================
Investments June 30 December 31,
2,005 2,004
=============================================================
% %
=============================================================
Held for trading: 0% 0%
Available for sale: 38% 19%
Held to maturity: 61% 78%
Investment in associates: 1% 0%
investment in subsidiaries: 0% 1%
Sub total-investments: 100% 99%
Provisions and Surplus: 0%
Provision for diminution: -1% -1%
Surplus on revaluation of investment 1% 2%
Sub total- provisions and surplus: 0% 1%
Investments (net): 100% 100%
-------------------------------------------------------------
Advances
-------------------------------------------------------------
Loans, cash credits, etc in Pakistan 97% 96%
Loans, cash credits, etc abroad: 2% 3%
Sub total: Loans, etc: 99% 99%
Finance lease in Pakistan: 2% 1%
Finance lease abroad: 0% 0%
sub total Finance lease: 2% 1%
Bills - payable in Pakistan: 2% 3%
Payable abroad: 2% 3%
Sub total: Bills: 4% 5%
Financing of COT: 0% 0%
Advances Gross: 104% 105%
Provisions: Gen & Specific: -4% -5%
Advances-Net: 100% 100%
=============================================================
Total Liabilities of MCB Bank increased to Rs 282 billion (of which Deposits Rs 241 billion-80% of TA) on June 30, 2005 as compared to Rs245 billion (Deposits Rs 220 billion- 85% of TA) as on December 31, 2004.
Total Equity including Surplus on Revaluation of Assets increased to Rs 18 billion (6% of TA) as on June 30, 2005 as against Rs 15 billion (6% of TA) as on December 31, 2004, partly due to issue of Rs 556 million right shares that attracted premium of Rs 835 million.
Under Contingencies and Commitments it has been noted in the financial statements that the bank makes commitments to extend credit in the normal course of its business but these being revocable, do not attract any significant penalty or expenses if the facility is unilaterally withdrawn. The management is urged to review this approach to make it equitable.
The first half of 2005 was very promising for MCB Bank as it achieved profit before tax of Rs 4.227 billion, compared with Rs 2.204 billion for the same period in 2004. Profit after tax exceeds Rs 3 billion, which is more than double compared to the corresponding period last year.
Major boost to its profitability, however, came from higher net markup income at 84% of gross markup as compared to 76% for 2004. The net markup income increased during the half year under review due to lower markup expense at only 16% of gross mark up income as compared to 24 % mark up expense for 2004.
The depositors expect reasonable return on their savings, after deductions of Zakat and Withholding Tax. The Government and the SBP, to be fair to the small savers, might look into this issue and consider linking the minimum return on bank deposits to KIBOR, inflation rate or other suitable index. Performance statistics of MCB Bank are given below.
===============================================================
Performance Statistics (Rs, million) (Audited)
===============================================================
Balance Sheet (Un-audited) On December 31,
As on June 30, 2005 2004
===============================================================
Total Assets: 300,393 259,285
Cash, balances with banks: 29,733 29,541
Lending to financial institutions: 2,386 10,965
Investments-Net: 97,684 67,195
Advances-Net: 156,069 137,318
Borrowing from fin. Institutions: 25,644 8,694
Deposits, other accounts: 241,461 219,966
Total Liabilities: 282,437 244,538
Share Capital: 4,265 3,372
Reserves, Retained earnings: 8,947 6,021
Surplus on Revaluation of Assets: 4,744 5,354
Total Equity: 17,956 14,747
Subordinated Loan: 1,599 1,599
Equity and Sub. Loans: 19,555 16,346
NPLs at end of period: 8,445 8,838
Contingencies and Commitments: 60,366 61,112
---------------------------------------------------------------
Ratios:
---------------------------------------------------------------
Cash and bank/Total Assets: 10% 11%
Investments/Total Assets: 33% 26%
Advance/Total Assets: 52% 53%
NPLs/Advances-Gross: 5% 6%
NPLs/Total Equity: 43% 54%
Provisions/Advances-Gross: 5% 6%
Provision required/Advances: 3% 4%
NPLs Provision Req./Prov. Held: 130% 116%
Deposits/Total Assets: 80% 85%
Total Liabilities/Total Assets: 94% 94%
Total Equity/Total Assets: 6.0% 5.7%
Equity + S. Loans/Total Assets: 6.5% 6.3%
Deposits/(Equity+S. Loans)-X: 12.3 13.5
Advances/Deposits: 65% 62%
Investments/Deposits: 40% 31%
Conting.& Com./(Equity+ SL)-X: 3.09 3.74
Book Value Per Share: 42.10 43.73
Quoted Price (15-8-05) - Rs: 87.45 -
Price/Book Value Ratio: 2.08 -
Income State. (HY end June 30) 2005 2004
Markup/interest earned: 7,187 4,340
Markup/interest expensed: 1,141 1,036
Net Markup/interest income: 6,046 3,304
Total non-markup income: 2,284 2,019
Admin expenses: 3,760 3,510
Profit before Taxation: 4,227 2,204
Profit after taxation: 3,040 1,289
---------------------------------------------------------------
Ratios: (Half Yearly Basis)
---------------------------------------------------------------
Net Markup Income/Total Assets: 2.0% 1.3%
Non-Markup Income/T. Assets: 0.8% 0.8%
Admin expenses/Total Assets: 1.3% 1.4%
Profit before Taxation/T. Assets: 1.4% 0.9%
Profit after taxation/Total Assets 1.0% 0.5%
Profit after tax/Total Equity: 16.9% 8.7%
EPS- (year-end paid up) - Rs: 7.13 3.82
Price/Earnings Ratio: 12.27 -
Interim Cash dividend: 17.5% 10.0%
Cash flow Summary (Half Year) 2005 2004
Net Cash flow from Operations: 30,604 -17,362
Net Cash flow from Investing: -31,417 17,909
Net Cash flow from financing: 994 -589
Net Cash flow position for period: 191 -42
Cash and bank at end of period: 29,733 25,314
===============================================================