MCB Bank is set to secure its top position as the most profitable bank in Pakistan with a profit after tax of Rs. 23.9 billion in 2019.
The bank was the most profitable private bank for 2 years straight with close competition with the National Bank of Pakistan beating the public sector bank in terms of profitability, same as last year. Nonetheless, the bank’s profit became the second-highest after NBP by the end of the third quarter of 2019 with a small difference.
MCB Bank recorded a handsome growth of 12.2 percent in profit compared with the last year. This is the second-highest profit of the bank in its history after it made Rs. 24.3 billion in 2014.
The board of directors has declared a 4th cash dividend of Rs. 5 per share i.e. 50% bringing the total cash dividend for the year 2019 to 170%, continuing its highest dividend payout trend in the commercial bank category.
The bank’s earnings per share grew to Rs. 20.14 from Rs. 17.17 per share at the end of 2019.
Banks Revenue from Interest-Based and Non-Markup Avenues
The bank drove its revenues from interest-based and non-markup avenues.
The key highlights were an impressive increase in net interest margins through a gradual shift in the maturity profiling of investment base along with a more refined structure.
The strategic profiling of the investments based on the interest rate calls resulted in a gradual shift from shorter to longer-term investments, thereby capitalizing on the significant interest rate movement during the year. Net interest income rose to Rs. 59.62 billion, 30% higher than last year on account of effective asset deployment of the low-cost deposits.
Analysis of the interest-earning assets shows that income on advances increased by Rs. 20.37 billion, primarily on account of an increase in yield of 398 bps. On the investment side, gross markup income increased by Rs. 30.76 billion, due to increased average volume by Rs. 66.61 billion and a yield of 391 bps.
On the interest-bearing liabilities side, the cost of deposits increased by 278 bps over last year.
The non-markup income block was reported at Rs. 16.68 billion with major contributions coming in from fee commission and foreign exchange income. One of the major revenue lines supplementing the fee growth was a commission from Bancassurance, with MCB Bank Limited leading new business generation in percentage terms.
Despite the inflationary surge during the year, growth in the operational network and constant investment in digital, cybersecurity and information technology-related platforms, the operating expense growth was contained to an impressive 5%, as efficient cost management remains one of the key strengths for MCB Bank Limited.
Banks Assets and Liabilities
The total asset base of the bank on the unconsolidated basis was reported at Rs. 1.52 trillion depicting an increase of 1% over December 2018. Analysis of the asset mix highlights that net investments and advances are reported at Rs. 748.77 and Rs. 496.68 billion respectively.
The non-performing loan base of the bank recorded a marginal increase of Rs. 469 million and was reported at Rs. 49.42 billion. The coverage and infection ratios of the bank were reported at 87.73% and 9.15% respectively.
On the liabilities side, the deposit base of the bank registered a significant increase of Rs. 95.73 billion (+9%) over December 2018.
Return on Assets and Return on Equity were reported at 1.59% and 16.84% respectively, whereas book value per share was reported at Rs. 122.54.