The Board of Directors of MCB Bank Limited (MCB) met under the chairmanship of Mian Mohammad Mansha to examine the bank’s performance and announced a profit before tax of Rs 51.989 billion for the year ended December 31, 2021.
The Board of Directors has declared a final cash dividend of Rs5.0 per share, or 50% of the total cash dividend for the year ended 2021, increasing the total cash dividend for the year ended 2021 to 190 percent, continuing the banking sector’s highest dividend per share trend.
MCB’s profit after tax (PAT) increased by 6% to Rs 30.81 billion for the year ended December 31, 2021, equivalent to Rs 26 in earnings per share (EPS) compared to Rs 24.50 the previous year.
From an average of 8.95 percent last year to 7.29 percent this year, the average policy rate has dropped 19 percent (166 basis points). However, the bank’s net interest income declined by only 10%, from Rs 71.33 billion to Rs 63.99 billion, due to a strategically coordinated increase in average current deposits and a balanced mix of producing assets.
Non-markup income increased by 11% year on year to Rs 20.1 billion, up from Rs18.1 billion the previous year. Improved transactional volumes, increased business activities, diversification of revenue streams through continuous enhancement of the bank’s product suite, investments in digital transformation, and a relentless focus on upholding high service standards aided a 14% increase in fee income, while dividend and foreign exchange incomes increased by 86% and 48%, respectively.
Despite continued inflationary pressures from currency depreciation and rising commodity prices, higher compliance-related regulatory charges, expanded branch outreach, and regular performance and merit adjustments of the human capital, the Bank continues to prudently manage its operating expenses with an increase of 8%.
On the provisioning front, proactive monitoring and recovery efforts resulted in a net reversal of Rs910 million in specific provision against non-performing loans (NPLs), while the general loss reserve of Rs4 billion created amid the uncertainty surrounding the Covid-19 outbreak was reversed, as the systematic risks surrounding the economic recovery have abated and the bank has created specific provision against exposures that reflected signs of financial distress.
MCB has been able to efficiently manage its credit risk thanks to a consistent focus on maintaining a solid risk management framework that includes structured assessment models, effective pre-disbursement evaluation tools, and a variety of post-disbursement monitoring systems. The bank’s non-performing loan (NPL) base decreased by Rs 698 million to Rs 50.49 billion.
The bank has not taken FSV into account when calculating particular provisions and has a Rs 636 million unencumbered general provision reserve. The bank’s coverage and infection ratios were reported to be 90.83 and 7.94 percent, respectively.
In terms of financial status, the Bank’s total asset base was reported at Rs1,970 billion (+12%) on an unconsolidated basis. To conclude the year at Rs 636 billion, the Bank’s gross advances grew by a record Rs 122 billion (+24%), outpacing the industry’s expansion. The corporate lending book climbed by Rs 106 billion (31%), while the consumer loan portfolio expanded by Rs 9.5 billion (32%), owing to increased activity in the construction and auto sectors.
On the liabilities side, the bank’s goal of expanding its no-cost current account base remained a top priority. As a result, non-remunerative deposits increased by 15.1% to Rs563 billion, bringing their share of total deposits to 40% in absolute terms as of December 31, 2021. The CASA mix was recorded at 93%, while the bank’s total deposits increased by 9% to Rs1,412 billion at the end of the year.
Return on Assets and Return on Equity were both recorded as 1.65% and 19.11%, respectively, while book value per share was reported at Rs 135.13.
During the year, MCB received $3.527 billion in home remittances, solidifying its position as an active player in SBP’s efforts to improve the flow of remittances into the nation through banking channels. MCB has received $216 million through the Roshan Digital Account (RDA) scheme until December 31, 2021.
The bank’s total Capital Adequacy Ratio (CAR) is 17.01 percent, compared to the required 11.5 percent, while meeting regulatory capital requirements (including capital conservation buffer of 1.50 percent as reduced under the BPRD Circular Letter No. 12 of 2020).
The bank’s Common Equity Tier-1 (CET1) to total risk-weighted assets ratio, which is 15.08 percent versus the required 6%, demonstrates the capital’s quality.
The bank’s capitalization resulted in a Leverage Ratio of 6.13 percent, which is much higher than the regulation maximum of 3%. The bank has a Liquidity Coverage Ratio (LCR) of 246.31% and a Net Stable Funding Ratio (NSFR) of 155 percent, compared to a requirement of 100%.
The bank’s outstanding performance was also recognized by the globally prestigious Finance Asia’s Country Awards, which named it the “Best Bank in Pakistan” in 2021.
According to a PACRA statement dated June 23, 2021, the bank has the highest local credit ratings of AAA/ A1+ in the long and short-term categories.
On a combined basis, the bank has the second-largest branch network in Pakistan, with over 1,600 locations. With the second greatest market capitalization in the industry, the Bank remains one of the most popular companies traded in the Pakistani equities market.