The Board of Directors of MCB Bank Limited (MCB), in its meeting under the Chairmanship of Mian Mohammad Mansha on August 07, 2024, reviewed the performance of the Bank and approved the condensed interim financial statements for the half-year ended June 30, 2024. The Board of Directors has declared 2nd interim cash dividend of Rs. 9.0 per share, i.e. 90%, in addition to 90% already paid, bringing the total cash dividend for the half year ended June 30, 2024, to 180%.

Through the focused efforts of the Bank’s management in building a no-cost deposit base and optimizing its earning assets mix, MCB’s Profit Before Tax (PBT) for the first half of 2024 increased to Rs 62.7 billion, a growth of 16%. Profit After Tax (PAT) grew by 20% to reach Rs. 31.9 billion, translating into earnings per Share (EPS) of Rs. 26.95 compared to an EPS of Rs. 22.52 reported in the year’s corresponding period.

Based on strong volumetric growth in average current deposits and timely repositioning within the asset book, net interest income for 1H’24 increased by 12% over the year’s corresponding period.

Non-markup income increased to Rs. 18.3 billion (+30%) against Rs. 14.1 billion in the corresponding period last year, with major contributions coming from fee commission income of Rs. 11.3 billion (+29%), foreign exchange income of Rs. 4.9 billion (+38%), and dividend income of Rs. 1.7 billion (+13%).

Improving customer and interbank flows, diversification of revenue streams through continuous enrichment of service suite, investments towards digital transformation and an unrelenting focus on upholding high standards of service delivery supplemented a broad-based growth in income from fee commission with trade and guarantee-related business income growing by 50%, cards related income by 43%, credit-related fee by 41% and branch banking customer fees by 20%.

The Bank continues to manage an efficient operating expense base and monitor costs prudently. Amidst a persistently high inflationary environment and continued investments in human resources and technological upgradation, the Bank’s operating expenses were reported at Rs. 28.4 billion (+18%). The increase was primarily on account of staff cost (+15%), utility cost (+28%) and IT-related expenses (22%). The bank’s cost-to-income ratio stands at 30.50% compared to 29.58%, as reported in the corresponding period last year.

Navigating a challenging operating and macroeconomic environment, the Bank has addressed asset quality issues by maintaining discipline in managing risk-return decisions. Diversification of the loan book across customer segments and a robust credit underwriting framework that encompasses structured assessment models, effective pre-disbursement evaluation tools and an array of post-disbursement monitoring systems has enabled MCB to manage its credit risk effectively; the Non-performing loan (NPLs) base of the Bank was reported at Rs. 57.0 billion as at June 30, 2024. The coverage and infection ratios of the Bank were reported at 89.07% and 8.64% respectively.

On the financial position side, the bank’s total asset base was reported at Rs. 2.67 trillion, an increase of 10.1% over December 2023. The increase was contributed by a 19% increase in the investment base, Rs. 232 billion over December 2023, and a 6% increase in advances(gross), Rs. 37 billion over December 2023.

The Bank continued its focus on building no-cost deposits, leading to a growth of Rs. 110 billion (+13%) in absolute current deposits during the first half of 2024. The Bank’s total deposit base stands at Rs. 1.99 trillion. The domestic cost of deposits was contained at 10.76%, compared to 7.93% in the corresponding period of last year, despite the significant increase in the average policy rate during the period.

The return on Assets and Return on Equity was maintained at 2.50% and 30.08%, respectively, whereas the book value per share was reported at Rs. 184.04.

During the period under review, MCB attracted home remittance inflows of USD 1,973 million (+23%) to consolidate its position as an active participant in SBP’s cause for improving the flow of remittances into the country through banking channels.

While complying with the regulatory capital requirements, the Bank’s total Capital Adequacy Ratio (CAR) is improved to 20.68% against the requirement of 11.5% (including a capital conservation buffer of 1.50% as reduced under the BPRD Circular Letter No. 12 of 2020). Quality of the capital is evident from the Bank’s Common Equity Tier-1 (CET1) to total risk-weighted assets ratio, which comes to 17.09% against the requirement of 6.23%. The bank’s capitalization also resulted in a Leverage Ratio of 6.2%, well above the regulatory limit of 3.0%. The Bank reported a Liquidity Coverage Ratio (LCR) of 261.91% and a Net Stable Funding Ratio (NSFR) of 164.85% against the requirement of 100%.

Through its notification dated June 22, 2024, the Pakistan Credit Rating Agency reaffirmed MCB’s credit ratings at “AAA / A1+” for the long-term and short-term.

On a consolidated basis, the bank operates the second largest network of more than 1,650 branches in Pakistan. The Bank remains one of the prime stocks traded in the Pakistani equity market and ranks amongst the highest-capitalized banks in the industry.