LAHORE: MCB Bank Limited (MCB) on Wednesday posted a 20 per cent increase in its net profit, which rose to Rs. 31.9 billion, resulting in earnings per share (EPS) of Rs26.95, up from Rs. 22.52 in the same period last year.
The bank held a Board of Directors meeting on Wednesday, chaired by Mian Mohammad Mansha, to r approve the condensed interim financial statements for the half-year ending June 30, 2024. The board declared a second interim cash dividend of Rs9 per share, or 90 per cent, in addition to the 90 per cent already paid, bringing the total cash dividend for the half-year ended June 30, 2024, to 180 per cent.
Through the bank’s strategic efforts to build a base of no-cost deposits and optimize its asset mix, MCB’s profit before tax (PBT) for the first half of 2024 rose to Rs62.7 billion, reflecting a 16 per cent increase.
With strong growth in average current deposits and timely adjustments in its asset portfolio, the net interest income for the first half of 2024 increased by 12 per cent compared to the previous year.
Non-markup income grew to Rs18.3 billion, a 30 per cent increase from Rs14.1 billion in the same period last year. Key contributions came from fee and commission income of Rs. 11.3 billion (+29 per cent), foreign exchange income of Rs4.9 billion (+38 per cent), and dividend income of Rs1.7 billion (+13 per cent).
Enhanced customer and interbank flows, a broader range of services, investments in digital transformation, and a continued focus on high service standards drove broad-based growth in fee and commission income. Notable increases included a 50 per cent rise in trade and guarantee-related income, a 43 per cent increase in card-related income, a 41 per cent boost in credit-related fees, and a 20 per cent gain in branch banking customer fees.
The bank has maintained an efficient operating expense base despite a challenging inflationary environment and ongoing investments in human resources and technology. Operating expenses rose to Rs28.4 billion (+18 per cent), primarily due to increased staff costs (+15 per cent), utility costs (+28 per cent), and IT-related expenses (+22 per cent). The cost-to-income ratio stands at 30.5 per cent, up from 29.58 per cent in the previous year.
Amid a difficult operating and macroeconomic environment, the bank has addressed asset quality by maintaining rigorous risk management practices. A diversified loan portfolio, robust credit underwriting, and effective monitoring systems have enabled MCB to manage credit risk effectively. As of June 30, 2024, the bank’s non-performing loans (NPLs) stood at Rs57 billion, with coverage and infection ratios at 89.07 per cent and 8.64 per cent, respectively.
On the financial position side, the bank’s total assets increased to Rs. 2.67 trillion, a 10.1 per cent rise since December 2023. This growth was driven by a 19 per cent increase in investments to Rs232 billion and a 6.0 per cent rise in gross advances to Rs. 37 billion.
Focusing on no-cost deposits, the bank saw a Rs110 billion (+13 per cent) increase in current deposits during the first half of 2024. The total deposit base is now Rs1.99 trillion. Despite a rise in the average policy rate, the domestic cost of deposits was managed at 10.76 per cent, up from 7.93 per cent the previous year.
Return on assets and return on equity were maintained at 2.5 per cent and 30.08 per cent, respectively, with the book value per share at Rs184.04.During the review period, MCB attracted home remittances totalling $1,973 million (+23 per cent), strengthening its role in promoting remittance inflows through banking channels.
The bank’s total capital adequacy ratio (CAR) improved to 20.68 per cent, exceeding the regulatory requirement of 11.5 per cent (including a capital conservation buffer of 1.5 per cent as per BPRD Circular Letter No 12 of 2020).
The common equity tier-1 (CET1) ratio was 17.09 per cent, surpassing the requirement of 6.23 per cent. The bank’s capitalization also resulted in a leverage ratio of 6.2 per cent, well above the 3.0 per cent regulatory limit. The liquidity coverage ratio (LCR) was 261.91 per cent, and the net stable funding ratio (NSFR) was 164.85 per cent, both exceeding the required 100 per cent.
The Pakistan Credit Rating Agency reaffirmed MCB’s credit ratings at ‘AAA / A1+’ for long-term and short-term ratings, respectively, as of June 22, 2024.On a consolidated basis, MCB operates the second-largest branch network in Pakistan, with over 1,650 branches. The bank remains a leading stock in the Pakistani equity market and ranks among the highest capitalized banks in the country.