PACRA maintains entity ratings of MCB bank

June 24, 2023 (MLN): Pakistan Credit Rating Agency Limited (PACRA) has maintained entity ratings of MCB Bank Limited (PSX: MCB) at "AAA" for the long term and "A1+" for the short term with a stable outlook forecast, a latest press release issued by PACRA showed.

MCB's ratings derive reassurance from its resilient market position and strong financial standing.

This resilience has been facilitated by the bank's parentage, wherein a diverse consortium of sponsors, primarily led by the Nishat Group, contribute effective oversight.

The ratings reflect MCB's robust market standing, which is bolstered by its well-established brand recognition and extensive outreach.

Notably, MCB has maintained its status as the leading player in the banking industry, boasting the highest CASA ratio.

However, in deposits, the bank has experienced a deceleration in its growth momentum by 2% (CY22: Rs1.37 trillion, CY21: Rs1.41tr) due to a strategic focus on generating no-cost current accounts and tapering off high-cost deposits.

MCB has consistently demonstrated a notable profit base in recent years, establishing its position in the banking industry.

As of Mar'23, the bank's Capital Adequacy Ratio stood at 18% (Dec'22: 18.8%).

Moreover, the bank has established an Islamic banking subsidiary, making it the first conventional bank to do so.

Pakistan's economy has traversed diverse phases in the past year, marked by political upheaval, an economic crisis, and devastating floods.

The country has grappled with daunting challenges such as soaring inflation, currency depreciation, and precarious foreign reserves.

However, the banking sector has persevered, showcasing high profitability.

The ratings are contingent upon the bank's capability to sustain its current position within the banking sector.

Moreover, any erosion in the perceived stability of the bank or changes in ownership that adversely affect its governance effectiveness would have unfavorable implications.

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