MCB Bank recorded a healthy top-line growth during 1HCY18, but that failed to translate into an equally healthy bottom-line growth. Yet, the ever growing and ever strengthening balance sheet suggests, things are shaping up rather nicely for MCB. The spreads have improved, advances have grown steadily, and the CASA ratio has also improved from an already high range.

The bank’s ADR crossed 50 percent on the back of a healthy 9 percent growth in advances over December 2017, which now stand at Rs511 billion. The relative improvement in earning yield on advances is also reflected in the top-line growth, as the yield improved by 39 bps year-on-year. On the investments front, the accumulation was steady with a 5 percent increase over December 2017.

The contribution to top-line was still significant, although it decreased from last year as the volumes dipped and so did the average earning yield on investments by 9 bps, over the same period last year.

On the liabilities front, the growth of 5.2 percent over December 2017 in the deposit base took the toll to over the trillion rupee mark. The deposits stood at a little over Rs1 trillion.

The best part of the increase was the direction in which the deposits grew, as evident by one of the highest CASA mixes in the industry with almost 93 percent. The growth in current account at 6 percent outpaced that of saving account at 5 percent. The concentration of current account to total deposits also improved to near 40 percent by the end of June 2018.

The non-mark-up income stream lost a bit of steam, primarily on the back of significantly reduced contribution from gain on sale of securities and dividend income. All other non-funded income fronts performed well, showing sizeable increase over the same period last year. MCB also maintained focus on recoveries on provisions against advances and investments, and recorded sizeable reversals on that account.

The administrative cost went up considerably, hampering the bottom-line. The one-off events such as the impact of near Rs2 billion on account of actuarial valuation of pension costs as per the Supreme Court orders, inflated the administrative expenses.

The bank seems to be growing the right direction on accounts of both assets and liabilities. The loan book is getting cleaner, and the yields are improving. MCB Bank seems well poised to cash in on any opportunity that may present itself in the quarters to come.