MCB reports a 45% growth in earnings during 9MCY20 owing to higher NII

MG News | October 27, 2020 at 05:54 PM GMT+05:00

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October 27, 2020 (MLN): MCB Bank Limited has reported a 45% growth in its earnings for the nine months ended September 30, 2020, from Rs. 16.1 billion (EPS: 13.63) to Rs. 23.5 billion (EPS: 19.75).

The Bank did not announce any dividend for the third quarter. However, the first interim cash dividend has already been paid at Rs. 5 per share i.e. 50% for the quarter ended March 31, 2020.

The improvement in earnings resulted from a 28% increase in net interest income, as well as a 21% increase in non-interest income. The growth in the latter transpired on the back of the presence of Gains on securities, which amounted to Rs. 2.8 billion.

On the other hand, the total expenses changed by only 1%, despite there being an increase in workers’ welfare fund and other charges by 39% and 51%, respectively.

While the above points contributed positively to the Bank’s profits, the increase in provisioning cost by 1.85x came as a huge setback. Moreover, the income tax paid during the period surged by 41%, thereby further restricting the increase in earnings.

Consolidated Financial Results for nine months ended September 30, 2020 (Rupees'000)
	Sep-20	Sep-19	% Change
Mark-up / return / interest earned	114,516,948	105,533,314	9%
Mark-up / return / interest expensed	(55,717,040)	(59,508,698)	-6%
Net mark-up / interest income	58,799,908	46,024,616	28%
NON-MARK-UP / INTEREST INCOME
Fee and commission income	8,791,768	9,048,543	-3%
Dividend income	629,210	828,495	-24%
Foreign exchange income	2,100,027	2,214,113	-5%
Income / (loss) from derivatives	(3,604)	3,045
Gain / (loss) on securities - net	2,877,447	(186,879)
Other income	168,490	115,393	46%
Total non-markup / interest income	14,563,338	12,022,710	21%
Total income	73,363,246	58,047,326	26%
NON-MARK-UP / INTEREST EXPENSES
Operating expenses	(28,232,321)	(28,385,235)	-1%
Workers welfare fund	(767,073)	(551,441)	39%
Other charges	(259,326)	(171,882)	51%
Total non-markup / interest expenses	(29,258,720)	(29,108,558)	1%
Share of profit of associates	518,852	374,289	39%
Profit before provisions	44,623,378	29,313,057	52%
Provisions and write offs - net	(5,189,574)	(1,823,093)	185%
Extraordinary / unusual items
PROFIT BEFORE TAXATION	39,433,804	27,489,964	43%
Taxation	(15,921,924)	(11,327,158)	41%
PROFIT AFTER TAXATION	23,511,880	16,162,806	45%
Earnings per share	19.75	13.63	45%

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