In CY24, MCB reported a net profit of PKR 57.61 billion (EPS: PKR 44.62), reflecting a 9% YoY increase from PKR 59.63 billion (EPS: PKR 50.32) in the same period last year.
Home remittances totaled USD 4.6 billion, with a market share of 13.2% in CY24. Total income grew by 10% to PKR 157.66 billion, improving the cost-to-income ratio to 32.68%. Total deposits reached PKR 1.922 trillion, with average current deposits increasing by PKR 82 billion due to a focus on no-cost deposits.
Gross advances rose to PKR 1 trillion, with corporate lending increasing by 106% to PKR 903.18 billion, while retail loans declined by 16% to PKR 62.27 billion. Consumer advances contracted by 4% YoY to PKR 37.24 billion due to macroeconomic challenges. Overseas loans grew by 47% YoY to PKR 60.16 billion.
MCB’s domestic market share in advances improved to 6.46%. The yield on advances declined to 16.87% from 17.89% in CY23. The investment portfolio recorded 16% YoY growth in floating PIBs, totaling PKR 687.54 billion, while fixed PIBs increased by 17% YoY to PKR 250.13 billion.
The weighted average maturity for fixed PIBs stood at 2.70 years, with PKR 82 billion maturing in 3QCY23. Treasury bills declined by PKR 278.5 billion to PKR 76.30 billion. The investment yield increased to 18.60% in CY24 from 18.37% in CY23. Investment composition stood at 7% for T-Bills (28% in CY23), 81% for PIBs (63% in CY23), 5% for equity securities (4% in CY23), 6% for other government securities (5% in CY23), and 1% for debt instruments. MCB’s deposit mix remained stable, comprising current account deposits (49%), savings deposits (48%), and term deposits (3%).
The bank aims to raise the current account deposit share to 55% in CY25. Ex-NIB-related FTP recoveries in CY24 amounted to PKR 921 million, bringing total recoveries to PKR 10.6 billion since 2017. ROE and ROA stood at 26.56% and 2.25%, respectively. Capital market performance turned last year’s deficit into a surplus of PKR 15.70 billion. IFRS-9 implementation resulted in the reclassification of equity investments and a reversal of related provisions.
MCB maintained a strong capital position, with a CAR of 19.35% and a leverage ratio of 6.37%, both well above regulatory requirements.
The bank has a 785 bps buffer over the regulatory CAR. Coverage and infection ratios were reported at 99.34% and 4.89%, respectively. CASA improved to 97.24% (96.81% in CY23), while CoD was contained at 9.23%. The bank’s Liquidity Coverage Ratio stood at 241.33%, and the Net Stable Funding Ratio at 128.29%, both exceeding the regulatory requirement of 100%. For Islamic banking, deposits grew by 2% YoY to PKR 204.46 billion, gross advances increased by 35% YoY to PKR 90.64 billion, and investments rose by 11% to PKR 132.54 billion in CY24. MCB aims to expand its Islamic banking network to 500 branches over the next three years, with 301 branches already operational in CY24.
Management is actively working on the IPO of MCB Islamic Banking. Going forward, MCB plans to focus on growing current accounts, particularly no-cost deposits. Management anticipates margin compression beginning in CY25. A 100 bps rate cut is expected in the upcoming monetary policy, with no further cuts anticipated in CY25. Growth potential is seen in consumer advances for CY25.
Management reported no major shifts in concentration levels and no significant maturities in 1QCY25. The average yield for fixed PIBs are 14.5-14.7%. No expansion is planned for conventional branches. Management expects no impact on NIMs, with the MDR impact for MCB Islamic estimated at PKR 2 billion. Fee and commission income is expected to witness decent growth.
Important Disclosures
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