MCB Bank sustained its profitability on the balance sheet with profit growth of 9% in the first half of 2019 as compared to the similar period of last year.
According to the financial statement, MCB Bank’s profits increased to Rs. 10.68 billion from Rs. 9.76 billion recorded in the same period in the previous year. The growth in profitability is exceptional considering the business environment of the banking industry.
These are an encouraging set of results, particularly because of the heightened economic concerns in Pakistan. The bank remained focused on executing its outlined strategy while being alert to risks in the economy.
The net interest income increased to Rs. 27.80 billion, 23% higher than the last corresponding period. Volumetric growth in average earning assets, particularly advances, along with an effective mix of shorter maturity earning assets in a rising interest rate scenario enabled the bank to post a higher gross mark-up by Rs. 21.42 billion, up 57% over the last corresponding period. In-spite of volumetric growth in deposits with re-pricing upon each policy rate change, gross mark-up expense growth reduced to Rs. 16.237 billion.
The non-markup income block of the bank was reported at Rs. 7.9 billion with major contributions coming in from fee commissions and foreign exchange income. Fees and commissions generated from core banking businesses increased by 4% to Rs. 5.6 billion. Foreign exchange income increased by 47% to Rs. 1.7 billion as a result of better leveraging of market opportunities.
MCB Bank continued with its NPL recovery trajectory, thereby reversing provisions against advances by Rs. 701 million in the first six months of 2019. The coverage and gross NPLs to advances ratio improved to 89.14% and 8.64% respectively.
The total asset base of the bank on the unconsolidated basis was reported at Rs. 1.57 trillion showing an increase of 5% over December 2018. Analysis of the assets mix shows that the net investments have increased by Rs. 44.1 billion (+6%) whereas advances have increased by Rs. 10.6 billion over December 31, 2018.
The bank remained ahead of the industry on the domestic deposits front, increasing its share to 7.65% from 7.57% as of December 2018. The deposit base of the bank has registered a healthy increase of Rs. 99.6 billion and stood at Rs. 1,148.6 billion, a growth of 9% over December 2018. Focusing on its low-cost deposit base, the bank was able to increase current deposits at the rate of 9% over December 2018.
The bank on a consolidated basis is operating the 2nd largest network of branches (1,554) in Pakistan. This includes 177 Islamic Banking branches of its wholly-owned Islamic Banking subsidiary. The bank remains one of the prime stocks traded in the Pakistani equity market with the highest market capitalization in the industry. The profitability and payout returns of the bank are one of the highest in the industry.