MCB Bank registered a profit growth of 46 percent in the first quarter of 2023 to reach Rs. 13 billion, translating into Earnings Per Share (EPS) of Rs. 11.02 compared to EPS of Rs. 7.52 reported in the corresponding period last year.
On the back of strong volumetric growth in the current account and timely repositioning within the asset book, net interest income for 1Q2023 increased by 66 percent over the corresponding period last year. The year-on-year (YoY) average current deposits of the bank registered a growth of Rs. 178 billion (31 percent).
Non-markup income increased to Rs. 5.9 billion (up 3 percent) against Rs. 5.7 billion in the corresponding period last year with major contributions coming in from fee commission income. The bank registered a growth of 27 percent in fee commission with income from trade and guarantee business up by 59 percent, cards-related income up by 42 percent, and income from home remittances up by 39 percent.
The bank continues to manage an efficient operating expense base and manage costs prudently. Amidst exceptionally persistent high inflation, the impact of sharp currency devaluation, and rapidly escalating fuel and utility costs, the operating expenses of the bank stood at Rs. 11.8 billion (up 25 percent). The cost-to-income ratio of the bank improved significantly to 32.77 percent from 39.65 percent reported in the corresponding period last year.
Proactive monitoring and recovery efforts led to a net provision reversal of Rs. 293 million against non-performing loans (NPLs) 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. 55.3 billion.
The bank has not taken FSV benefits in the calculation of specific provisions against its non-performing loans (NPLs) base. The coverage and infection ratios of the bank were reported at 81.88 percent and 7.87 percent, respectively.
On the financial position side, the total asset base of the bank grew by 1.39 percent to Rs. 2.11 trillion. Analysis of the assets mix highlights that net investments and gross advances have decreased by Rs. 33 billion (down 3 percent) and Rs. 95 billion (down 12 percent) over December 31, 2022, respectively, whereas lending to financial institutions increased by Rs. 71 billion (up 140 percent).
The bank continued its focus on building no-cost deposits, leading to a robust growth of Rs. 178 billion (up 31 percent) in average current deposits. The average current to total deposits ratio improved to 51.2 percent in Q12023 from 40.1 percent in Q12022. The domestic cost of deposits was 7.15 percent as compared to 4.91 percent in the corresponding period of last year due to the exceptional increase in interest rates during the period.
Return on Assets and Return on Equity significantly improved to 2.49 percent and 29.63 percent respectively, whereas the book value per share was reported at Rs. 153.29.
During the period under review, MCB attracted home remittance inflows of $786 million to further consolidate its position as an active participant in SBP’s cause for improving the flow of remittances into the country through banking channels; with market share improving to 12.3 percent compared to 11.4 percent in the corresponding period of last year.
The Board of Directors has declared the first interim cash dividend of Rs. 6.0 per share i.e. 60 percent for the quarter ended March 31, 2023.