Islamabad, Oct 28: MCB Leverages High CASA to Strengthen Financial Position
Conforming to its policy and most entertaining to the shareholders, MCB Bank Limited (MCB) has declared an interim of Rs9/ share in addition to Rs 18/ share previously declared in 1HCY24.
Annualising the bank’s 9MCY24 net profit at Rs 4.8 billion represents an amazing 10 percent yoy increase.
The playbook remains similar to 1HCY24, focusing on High CASA and low-cost deposits, backed by non-core income and further cost-saving efforts
High CASA Credit to customers on the other hand rose to Rs 791.83 billion, an improvement by Rs 258 billion, and crossing the Rs 1.5 trillion in the bank’s history.
The investment to deposit ratio remained above 70 percent, down slightly from June-end figure.
it was four percent higher than December 2023, however.
Whether this is by design or by default, is unclear – but the government’s borrowing tendency is irreversibly firmly in place – though of course at a significantly lesser intensity than hitherto.
It could mean that in the near to medium future banks may look for other destination to park the funds.
But for now, investments with the sovereign stay the preferred parking space.
Also, the progresses raised fairly in December 2023 – demonstrating a continuously recovering economy with interest’s rate reversal.
A Rs102 billion rise in the gross advances over December 2023 brought the advanced-to-deposit ratio to only 33 per cent,
Which remained almost unchanged for majority of the year 2024.
The increase in certain effective tax rates could be guarded against given the uncertainty of whether or not
the ADRs may be low on the cut-off date for December – expect some growth in ADR for 4QCY24 indeed.
The MCB group’s administrative expenses rose 16 percent annually as it faces a high inflationary environment and investment in technology.
The non-markup income on the other hand have increased from strength to strength recording a 19% year on year growth with commission on fees,
branch banking and investment service fueling the income.
Cost to income was almost flat near 31 percent for the cost income ratio, probably making it one of the lowest in the peer group.
What 4QCY24 looks like may not necessarily either fully mirror or be substantially different from the picture outlined in 9MCY24
with regard to both assets’ accumulation and its structure and deposits expansion.
The coverage ratio returned to the 90s, the infection ratio improved by more than 1 percentage point from December 2023,
And the NPLs were contained at Rs55 billion, which was against the industry trend. Due to ongoing technological investments and a high rate of inflation,
MCB’s administrative costs increased by 16% annually. Due mostly to fee commissions, branch banking, and investment services,
The non-markup revenue continues to rise steadily, recording an outstanding 19 percent year-over-year growth.
Easily one of the finest in the peer group, the cost-to-income ratio remained steady at about 31%.
It’s possible that the plans for 9MCY24 and 4QCY24 will differ slightly in terms of deposit growth, asset composition, and asset accumulation.
Even if the ADRs are close to an all-time low,
MCB is still cautious on all solvency metrics and appears to be in good standing on the balance sheet.
The sovereign yields have been a delightful treat for the shareholders.
It wouldn’t make much difference to take a little quarter-long rest.
