MCB_1QCY23 Result Review, (AKD Off the Analyst's Desk Apr 27, 2023)
MCB Bank Limited (MCB) announced its earnings earlier today wherein the bank posted NPAT of PkR13.1bn (EPS: PkR11.0) for the quarter, higher by 1%QoQ/46%YoY and slightly higher than our estimate of PkR9.9/sh.
- NIMS at MCB expanded during the quarter, to the tune of 83bps on a QoQ basis to 6.6% in 1QCY23. As a result, the bank’s net interest income saw an increase of 17%QoQ and 66%YoY to PkR30.1bn, higher than our estimate of PkR28.2bn, driving the surprise in the earnings.
- Markup earned by the bank during the period saw a sequential increase of ~7%QoQ while the markup expense for the bank contracted by 1% during the same period, indicating a likely improvement in the bank’s CASA during the period.
- Non-interest income increased by 36%QoQ to PkR5.9bn, largely driven by the absence of a mammoth PkR1.6bn realized loss on its securities portfolio that was incurred in the previous quarter.
- In terms of provisioning, the bank posted provisions of PkR624mn during the quarter, compared to a reversal of PkR1.5bn in the earlier quarter.
- Operating expenses at MCB increased by 6%QoQ/26%YoY, clocking in at PkR12.3bn in 1QCY23. The cost-to-income ratio of the bank improved to 34% during the quarter, compared to 39% in the earlier quarter and 41% in the SPLY.
- As anticipated, the earnings growth was marred by higher taxation during the period, with the effective tax rate for MCB clocking in at 43% in 1QCY23 as compared to 35% in the earlier quarter.
- Alongside the earnings, the bank also announced a cash dividend of PkR6.0/sh, in line with our estimates, corresponding to a payout ratio of 54% for the quarter.
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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