Lahore August 23 2022: The total asset base of the MCB Bank Limited grew by 3 percent and was reported at Rs. 2,039 billion at the period ending 30th June 2022, according to the information shared with investors.
Gross advances registered an increase, of Rs. 15 billion (+2 percent), as the consumer lending book further consolidated its traction gained in the last year and grew by Rs. 5.4 billion (+14 percent).
During the period under review, MCB’s strategic objective of achieving growth in no-cost current account base was reinforced by an uncertain and volatile interest rate scenario; leading to persistent re-pricing gaps between the earning assets and liabilities. Hence, the Bank registered a growth of 21 percent in non-remunerative deposits to close the period at Rs. 681.46 billion.
CASA mix was reported at an industry leading level of 92.41 percent which in turn is a reflection of the customer loyalty earned by the Bank through sustained provision of quality services over a rich heritage of 75 years. The total deposits of the Bank grew by 13 percent, as compared to an industry growth of 9 percent.
While complying with the regulatory capital requirements, the Bank’s total Capital Adequacy Ratio (CAR) is 16.45 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 15.43 percent against the requirement of 6 percent. Bank’s capitalization also resulted in a Leverage Ratio of 5.86 percent which is well above the regulatory limit of 3.0 percent. The Bank reported Liquidity Coverage Ratio (LCR) of 214.25 percent and Net Stable Funding Ratio (NSFR) of 131.53 percent against requirement of 100 percent.
With strong build up in core earnings, MCB’s Profit Before Tax (PBT) for the half year ended June 30, 2022 increased to Rs 32.5 billion with a historic high PBT of Rs. 17.6 billion for the second quarter. Retrospective application of tax amendments along with higher tax rates for the current period enacted through Finance Act, 2022 resulted into 87 percent effective tax rate for second quarter. Profit After Tax (PAT) registered a decline of 25 percent to reach Rs. 11.13 billion against Rs. 14.74 billion reported in the corresponding period last year; translating into Earning Per Share (EPS) of Rs. 9.39 compared to an EPS of Rs. 12.44.
On the back of strong volumetric growth in current account and favorable yield curve movements, net interest income for H1’22 increased by 24 percent over corresponding period last year. YoY average current deposits of the Bank registered a growth of Rs 86.30 billion (+17 percent) while the CASA deposits averaged at Rs. 1,366 billion; hence, the average CASA to total deposits ratio was measured at a level of 93 percent in H1’22.
Non-markup income registered a growth of 36 percent and aggregated to Rs. 12.90 billion against Rs. 9.50 billion in the corresponding period last year. The growth achieved is broad based and driven primarily by the prudent positioning of foreign exchange assets/liabilities amidst comparatively favorable swap curves and diversification of revenue streams through continuous enrichment of service suite while upholding highest service standards; foreign exchange, dividend income and fee & commission income rose by 195 percent, 28 percent and 12 percent respectively.
MCB strives to inculcate operational efficiencies across its entire spectrum through optimization, automation and streamlining of business processes. This relentless focus has enabled the Bank to prudently manage its operating expense base despite sustained inflationary pressures due to currency devaluation and rising commodity prices, higher compliance related regulatory charges, expansion in branch outreach and regular performance and merit adjustments of the Human Capital.
For H1’22, the operating expenses of the Bank were recorded at Rs. 19.44 billion, growing by a modest 13 percent year on year, while the cost to income ratio significantly improved to 38 percent from 42 percent reported in corresponding period last year.
Proactive monitoring and recovery efforts led to a net provision reversal against non-performing loans (NPL’s) which aggregated to Rs. 1,696 million 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. 51.19 billion. The Bank has not taken FSV benefit in calculation of specific provision against its non-performing loans (NPL’s) base. The coverage and infection ratios of the Bank were reported at 86.78 percent and 7.87 percent respectively.
