MCB commenced 2019 on positive notes, posting decent profit growth of 6 percent in the first quarter of 2019 as compared to the similar period in 2018.
According to the financial statement, the bank’s profit increased to Rs. 5 billion in the period of January to March 2019 as compared to last year’s profit of Rs. 4.7 billion.
It has declared a first interim cash dividend of Rs. 4 per share for the quarter ended March 31, 2019, continuing with its highest dividend payout trend.
Standalone Profit Before Tax (PBT) of the bank for the three months period ending on March 31, 2019, increased by 24% to Rs. 9.08 billion. The effective tax rate for the quarter increased to 44% primarily on account of 4% supertax recorded for the tax year 2018, as enacted through the Second Supplementary Act, 2019.
Based on interest rate calls, the shorter term maturity profiling of the asset base enabled the bank to leverage a significant interest rate hike. Resultantly, the net interest income increased by an impressive 22% over the corresponding period last year. The non-markup income block of the bank was reported at Rs. 3.5 billion with major contributions coming in from fee line under credit, guarantees and remittance segments.
On the operating expenses side excluding pension fund, despite the surge in inflationary pressures, the bank was able to contain the growth percentage to 12%. The increase includes the deposit protection premium cost amounting to Rs. 288 million, which was made applicable from July 01, 2018. Excluding the impact of deposit protection premium, the increase in operating cost was only 8.31%. The bank continued with its recovery trajectory of classified portfolio and reversed provision amounting to Rs. 405 million on advances whereas reversal of Rs. 26 million was recorded on equity portfolio in the first quarter of 2019.
The bank remained ahead of the industry on the domestic deposits front, increasing its share to 7.66% from 7.57% as of December 2018. Based on the weekly averages, the domestic deposit base of MCB has grown by 1% as opposed to a decline of 2% reported by the industry. Focusing on its low-cost deposit base, the Bank was able to add 150,000 new accounts during the first quarter of 2019, which reflects customer confidence and the inherent value of a strong brand name.
The bank on a consolidated basis is operating the 2nd largest network of 1,550 branches in Pakistan. This includes 176 Islamic Banking branches of its wholly owned Islamic Banking subsidiary. The Bank remains one of the prime stocks traded in the Pakistani equity markets with the highest market capitalization in the industry. The profitability and payout returns of the bank are one of the highest in the industry.
The bank remains well capitalized as the Capital Adequacy Ratio is 17.82% against the requirement of 11.90% (including capital conservation buffer of 1.90%). Quality of the capital is evident from Bank’s Common Equity Tier-1 (CET1) to total risk-weighted assets ratio which comes to 15.72% against the requirement of 6.00%. Bank’s capitalization also resulted in a leverage ratio of 7.28% which is well above the regulatory limit of 3.0%. The bank reported a Liquidity Coverage Ratio (LCR) of 195.96% and Net Stable Funding Ratio (NSFR) of 132.20% against a requirement of 100%.