May 11, 2022 (MLN): MCB Bank Limited is in the final stages of making a decision on a potential Easypaisa acquisition and the announcement in this regard is expected in the next 15 days, the management of the company informed while holding a corporate briefing session.
The management indicated that it is likely that the bank will maintain a dividend payout ratio whether the acquisition goes through or not, according to key takeaways covered by Topline Securities.
The bank had earned net profits of Rs9.1 billion (EPS: Rs7.66) for the quarter ended March 2022, which was 29.4% higher than the net profits of Rs7bn recorded in the corresponding period last calendar year, mainly due to higher other income, a reversal in provisions, and higher net interest income (NII).
On the back of strong volumetric growth in the current account, net interest income for 1QCY22 increased by 19% over the corresponding period last year. Working on a well-defined strategy, the average current deposits of the bank registered a growth of Rs71.3 billion (+14%), when mapped against the corresponding period last year.
Within the investment portfolio, fixed PIB accounts for PKR266bn (37% of total PIBs) which is yielding around 10.5-10.6%, having a maturity of 2.9 years, whereas overall PIBs are yielding 10.3%. Similarly, the T-bills book stands at Rs418bn, which is yielding around 9.92%. Overall NIMs of the bank are likely to remain flat in 2QCY22 and are expected to improve in the third and fourth quarters, due to full repricing of advances and investments.
The entire banking industry is witnessing strong growth in foreign exchange income led by volatility in the exchange rate.
However, the management does not expect any significant impact on bank earnings due to falling Pakistan Eurobond prices as the bank test the instruments for impairment if the value is down by 30% or above, it added.
The management expects even better numbers for income from foreign exchange in 2QCY22 due to the volatility in FX markets during the quarter so far.
With regards to exposure in Sri Lankan Development Bonds (SLDBs), the management said that it currently holds zero exposure in SLDBs, therefore, no significant impact of default is expected on their books.
On interest rate outlook, the management expects monetary tightening to continue and another 100-150bps cannot be ruled out as the spread between the policy rate and KIBOR has further expanded due to increasing inflation expectations.
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