MCB Bank recorded a year-on-year growth of 24 percent in profits for the half-year that ended June 30, 2020 as the bank’s unconsolidated profit after tax increased to Rs. 13.2 billion compared to Rs. 10.67 billion in the corresponding period last year.
This performance translated to Earnings Per Share (EPS) of Rs 11.15 for H1 2020 (H1’19: Rs. 9.01). The strategic maturity profiling of the investments based on the interest rate calls resulted in a gradual shift from shorter to longer-term investments, thereby capitalizing upon the significant opportunity available.
The bank’s net interest income for the first six months of 2020 increased by 30% over the first half of 2019, to Rs. 36.01 billion, on the back of volume growth and 69bps increase in net interest margin.
The stock market has responded to the COVID-19 pandemic with worrying volatility; resultantly, the bank has recorded a charge of Rs. 1.3 billion against equity investment portfolio. With respect to advances, the full potential effect of the economic stress posed by the COVID-19 outbreak remains difficult to predict, therefore management has exercised prudence and booked General Provision of Rs. 4 billion during the half-year, providing insulation and loss absorption capacity in case of any NPL surge.
On the financial position side, the total asset base of the bank on an unconsolidated basis was reported at Rs. 1.67 trillion depicting an increase of 10% over December 2019. Analysis of the asset mix highlights that net investments increased by Rs. 180 billion (24%) whereas gross advances decreased by Rs. 32 billion (-6%) over December 2019.
The Non-performing loan (NPLs) base of the bank recorded an increase of Rs. 939 million and was reported at Rs. 50.4 billion. The increase was primarily on account of currency devaluation impact of foreign currency-denominated NPLs with no significant accretion in the number of cases.
The Bank has not taken FSV benefit in the calculation of specific provision and has increased its un-encumbered general provision reserve to Rs. 4.5 billion. The coverage and infection ratios of the Bank were reported at 94.02% and 9.91% respectively.
The deposit base of the Bank registered an unprecedented increase of Rs. 129.92 billion (+11%) over December 2019, with over 50% growth from current accounts, improving the current account mix to 39.0% and CASA ratio to 94.2%.
During H1 2020, MCB accelerated its business momentum while overcoming the challenges posed by the COVID-19 pandemic which had an adverse impact on the economic growth the world over, including Pakistan.
Following the breakout of the COVID-19 pandemic, MCB has taken all necessary steps to ensure continued and uninterrupted services to our customers in a safe environment. The State Bank of Pakistan has taken a host of measures to manage the impact of the pandemic, including cuts in interest rates, refinance schemes for continued payment of wages and salaries, ease in debt burden ratio, rescheduling/ restructuring of financing facilities, etc.