Qudsia Bano

MCB Bank Limited has demonstrated robust financial performance for the third quarter of 2023. The standout figure is the markup interest earned, which witnessed an impressive 62% year-on-year (YoY) growth, soaring to Rs90.1 billion. This substantial increase translated into a commendable 75% growth in net markup interest income, reaching Rs39.4 billion. The bank's ability to generate significant income from interest-bearing assets underscores its effective management strategies. The non-markup interest income for the three months recorded a healthy 16% YoY growth, amounting to Rs8.5 billion. This increase, while not as dramatic as the markup-related metrics, showcases MCB Bank's diversified revenue streams and the bank's efforts to enhance its non-interest income avenues.

Total income for the three months surged by an impressive 60% YoY, reaching Rs47.9 billion. This growth is driven by the significant uptick in both interest and non-interest income. The profit-before-tax saw a remarkable 80% YoY growth, standing at Rs34.3 billion. The profit-after-tax mirrored this stellar performance, exhibiting a 100% YoY growth, totalling Rs17.5 billion. Earnings per share (EPS) also witnessed a robust 100% growth, emphasising the bank's commitment to delivering value to its shareholders.

Expanding its impressive performance over the nine months ending on September 30, 2023, MCB Bank continued its upward trajectory. The markup interest earned for the period experienced a notable 67% YoY growth, reaching an impressive Rs235.4 billion. Net markup interest income also demonstrated resilience, growing by 73% to Rs106.4 billion. This sustained growth underscores the bank's effective management of interest-related components. The non-markup interest income for the nine months displayed a commendable 16% YoY growth, amounting to Rs22.6 billion.

While not as pronounced as the markup-related metrics, this growth highlights MCB Bank's diversified revenue streams and its strategic focus on bolstering non-interest income. Total income for the nine months reached a significant Rs129 billion, reflecting a substantial 58% YoY growth. The profit-before-tax recorded a robust 71% YoY growth, standing at Rs88.1 billion. Profit-after-tax mirrored this stellar performance, exhibiting a remarkable 122% YoY growth, totalling Rs44.1 billion. EPS continued to soar, registering a formidable 122% YoY growth, emphasising the bank's sustained commitment to delivering value to its shareholders over the extended period.

The financial performance of MCB Bank Limited, as indicated by the net profit margin, reflects a notable decrease from 24.98% in CY21 to 16.31% in CY22. This decline raises concerns about the bank's ability to sustain its profitability. MCB Bank’s EPS growth has been positive but slowing down. The company grew by 21.11% in CY20, but only by 6.12% in CY21. In CY22, the growth rate slightly rose to 6.27%. This decreasing pattern suggests a potential slowdown in the bank's earnings growth. The price/earnings to growth (PEG) ratio, an important valuation metric, provides insights into MCB Bank’s stock valuation relative to its earnings growth. The decreasing trend in PEG ratios (from 0.96 in CY21 to 0.67 in CY22) indicates that the stock might be becoming more attractively valued about its growth prospects.

About the bank

MCB Bank Limited is a Pakistan-based banking company. The bank's segments include retail banking, corporate banking, consumer banking, exchange, trade financing, investment banking and other banking activities by its overseas operations. The bank operates approximately 1,426 branches within Pakistan and 11 branches outside Pakistan. It operates in South Asia and the Middle East.

Credit: INP-WealthPk