MCB announced earnings today for 9MCY21 at PKR 22.9bn (EPS: PKR 19.29), depicting a YoY decline of 2% while slightly up 1% QoQ (3QCY21 EPS: PKR 6.73). Sequential uptick came primarily on the back of net reversals booked this quarter, while NII and NFI remained under pressure. The bank announced a DPS of PKR 4.50 for the quarter taking total payout to PKR 14/share for 9M.

Result Highlights

• Net Interest Income of the bank settled at PKR 51.1bn, portraying a decline of 13% YoY during 9MCY21 while down 1% QoQ, mainly on the back of higher interest expense.

• NFI has posted a 5% YoY uptick led by fee income worth PKR 10bn against PKR 8.8bn recorded SPLY, marking a jump of 15% YoY. Moreover, dividend income and other income were also up during 9MCY21 by 95% YoY and 4.8x, respectively. During the quarter FX income was up 68% YoY while other income settled at PKR 133mn (PKR PKR 84mn SPLY) which supported NFI.

• The bank booked a significant net reversal of PKR 1.5bn this quarter taking total reversals to PKR 3.5bn for 9MCY21, which we attribute to improved outlook on the asset quality following the rebound in economic activity across the country.

• OPEX clocked in higher by 7% YoY during 9MCY21 / 1% QoQ with cost/income settling at 42% during 9MCY21 against 47% SPLY.

• Effective tax rate was 41.5% during 9MCY21.

Courtesy- AHL Research