MCB Overtakes HBL as the 3rd Most Profitable Bank in Pakistan

MCB Bank has posted a profit of nearly Rs. 9 billion in the first quarter of the calendar year 2022.

According to the financial statement, the bank posted profit growth of 31 percent year-on-year to reach Rs. 8.9 billion, translating into Earning per Share (EPS) of Rs. 7.52. The bank had booked a profit of Rs. 6.79 billion in the same period last year. The board of directors has declared the first interim cash dividend of Rs. 5.0 per share.

MCB Bank retained its ranking at number 3 in terms of profitability by the end of the first quarter of 2022.

In 2022, the ranking of the bank witnessed a slight change as United Bank Limited and Meezan Bank took 1st and 2nd spots in terms of profits. Whereas MCB bank stood at 3rd place.

HBL’s ranking dropped significantly to number 4. The bank’s profitability stood lesser than these banks in the said period. However, the decline of the HBL’s profitability was reported due to a one-time severance cost of Rs 2.6 billion on account of a voluntary separation scheme offered by the bank to its clerical staff.

As the competition among these four banks is likely to intensify in the remaining three quarters of 2022, it is also likely that HBL will bounce back with staggering profit growth in the coming months of 2022, and it can regain its position as one of the leading profitable banks in Pakistan.

On the back of strong volumetric growth in the current account, net interest income for 1Q’22 of MCB Bank increased by 19 percent over the corresponding period last year. Working on a well-defined strategy, the average current deposits of the Bank registered a growth of Rs. 71.3 billion (+14%), when mapped against the corresponding period last year

Non-markup income registered a growth of 20 percent and aggregated to Rs. 5.72 billion against Rs. 4.75 billion in the corresponding period last year. The growth is mainly attributable to a rise in foreign exchange and dividend income by 94 percent and 81 percent respectively; on the back of prudent positioning of foreign exchange assets and liabilities amidst comparatively favorable swap curves and resurging economic activity within the country.

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 Bank to effectively manage its credit risk. The non-performing loan (NPLs) base of the bank was reported at Rs. 51.34 billion. The bank has not taken FSV benefit in the calculation of specific provisions against its non-performing loans (NPLs) base. The coverage and infection ratios of the bank were reported at 87.91 percent and 8.14 percent respectively.

MCB Bank Achieves Assets of Rs. 2 Trillion Value

On the financial position side, the total asset base of the bank grew by 6 percent to cross the “Two Trillion” landmark and was reported at Rs. 2,095 billion; the major contribution comes from the investment book which increased by Rs. 143 billion (+14%).

While the gross advances registered a slight decline of Rs. 5 billion (-1%), the consumer lending book grew by leveraging significant activity in the construction and auto segment and consequently added Rs. 2.8 billion in the first quarter (+7%).

On the liabilities side, achieving growth in a no-cost current account base remained a key strategic objective for the Bank. Thereby, non-remunerative deposits grew by 14 percent to close at Rs. 640 billion; improving their mix in the total deposits to 43 percent in absolute terms as of March 31, 2022.

CASA mix was reported at an industry-leading level of 92.87 percent which in turn is a reflection of customer loyalty earned by the Bank over a rich history of 75 years through the sustained provision of quality services. The total deposits of the bank grew by 5.65 percent as compared to an industry decline of 2.37 percent (domestic deposits) to close the period at Rs. 1,492 billion.

Return on Assets and Return on Equity improved to 1.75 percent and 22.14 percent respectively, whereas the book value per share was reported at Rs. 136.66.

During the period under review, MCB attracted home remittance inflows of USD 823 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. The inflow by MCB till March 31, 2022, under the Roshan Digital Account (RDA) initiative, has stood at USD 282 million. Under the “Mera Pakistan Mera Ghar” initiative, till March 31, 2022, the Bank has disbursed 841 loans of Rs. 3.4 billion.