MCB Bank’s profit down 29pc in January-September

KARACHI: Profit of MCB Bank Limited sharply fell 29 percent in the nine months period ended September 30 as tax payment and eroding capital gains bit its earnings, analysts said on Wednesday.

The bank recorded Rs13.623 billion profit in the January-September period with earnings per share (EPS) of Rs11.46, compared to Rs19.122 billion with EPS of Rs16.77 in the corresponding period a year earlier, a filing with the Pakistan Stock Exchange (PSX) said.

The bank said the significant decrease in profit after taxation was on account of a tax provision reversal amounting to Rs3.59 billion recorded in 2017.

MCB Bank declared third interim cash dividend of Rs4/share for the nine months period ended September 30, which is in addition to Rs8/share interim dividend already paid to shareholders.

Analyst Mustafa Mustansir at Taurus Securities said earnings were mainly down due to lower capital gains, pension cost charge in the earlier half of the year, and higher taxation due to absence of reversals taken during the same period last year. In January-September, strategic management of the earning asset mix resulted in 7.70 percent increase in net interest income over the corresponding period last year, the bank said in a separate statement.

“Analysis of the interest earning assets highlights that income on advances increased by Rs6.8 billion, primarily on account of significant increase in average advances volume of Rs99 billion with improved yield of 49bps (basis points),” it added. “On the investment side, the average volume dropped by Rs79 billion with increase in yield of 5bps, resulting in overall decrease of Rs4 billion in investments income.”

Topline Research said key risks for the bank include delay in hike in policy rate, lower than expected advances growth and deposit growth, and deterioration in economic indicators. MCB Bank’s interest expense increased Rs1.1 billion with growth in average deposits by Rs138 billion when compared with the corresponding period last year.

Current accounts registered an average increase of Rs51.3 billion improving the concentration level to 38 percent of total deposit base as at September 30.

The bank continued to enjoy one of the highest current and saving accounts base in the industry of 92.46 percent.

The non-markup income block of the bank was reported at Rs11.76 billion, reflecting a decrease of 15 percent year-on-year, “primarily on account of capital market performance”.

“The bank continued with its focus on core non-fund based income stream which was reflected in nine percent growth in the fee, commission and brokerage line,” MCB Bank said.

“Income from dealing in foreign currencies reflected an increase of Rs196 million (up 18 percent) when compared with corresponding period last year.”

On the administrative expenses side, the bank reported an increase of 12.47 percent (excluding pension fund) with major increase in personnel cost, rent, depreciation and repairs, mainly associated with ex-NIB operational activity.

Administrative expenses include one-off expense of Rs1.90 billion on account of past service cost based on actuarial valuation of pension cost.

The bank posted a provision reversal of Rs1.92 billion, with Rs220 million reversals in provision against investments.

The total asset base of the bank on a standalone basis was reported at Rs1.296 trillion reflecting a decrease of 2.4 percent over December 31, 2017.

ABL’s nine-month profit up 2pc

Allied Bank Limited (ABL) recorded a two percent increase in its profit to Rs10.108 billion for the nine-month period ended on September 30, translating into EPS of Rs8.83. ABL earned Rs9.892 billion with EPS of Rs8.64 in the corresponding period a year earlier.

The bank announced an interim cash dividend for the third quarter at Rs2/share, which is in addition to interim dividend of Rs4/share already paid for the year ending December 31.

Analyst Mustafa Mustansir at Taurus Securities said earnings remained upbeat in the nine-month period by virtue of consistently robust recoveries against loans and higher capital gains compared to the corresponding period a year earlier.

In January-September, ABL’s net interest income remained almost flat at Rs23.622 billion compared to Rs23.552 billion a year ago. Non-interest income, however, rose to Rs9.373 billion from Rs6.802 billion.

Meezan Bank’s earnings soar 32pc

Profit of Meezan Bank climbed 32 percent to Rs6.248 billion for the nine-month period ended on September 30, translating into EPS of Rs5.34, a PSX filing said.

The bank earned Rs4.717 billion with EPS of Rs4.58 in the corresponding period a year earlier. Meezan Bank didn’t announce any cash dividend.

Topline Research said the primary reason for the increase in earnings was the rising interest rates with policy rate having gone up by 275 basis points in 2018.

The bank’s net spread earned amounted to Rs19.127 billion in the January-September period compared with Rs15.050 billion in the corresponding period a year earlier. Other income soared to Rs24.436 billion from Rs20.244 billion in the corresponding period a year earlier.

“Key risks for the bank include deterioration in economic indicators, uptick in provisioning charge, lack of investment avenues and lower than expected rate hike,” Topline Research said in a flash note.

Telenor Pakistan’s Q3 revenue up 11.5pc

Telenor Pakistan’s revenues from subscription and traffic increased 11.5 percent to Rs29.976 billion in the third quarter, a statement said.

The revenues were up Rs3.081 billion from the same quarter last year. Reported earnings before interest, tax, depreciation and amortisation margin was 77 percent, but adjusted for reversals, the underlying margin was 54 percent, the company’s statement added.