MCB Bank Limited (MCB) 1QCY21 Result Review

Dear Clients,

– MCB Bank Limited (MCB) reported 1QCY21 result today posting Profit after Tax (PAT) of PkR7.1bn (EPS: PkR5.9, up 7%Y/Y). The result was above KASB’s estimate due to recognition of reversal in provisioning and higher than anticipated fee income.

– The result was accompanied with an interim dividend of PkR4.5/sh.

– Net Interest Income slightly decreased by 6% Y/Y in 1QCY21 as the full impact of asset repricing was taken into account.

– Non-interest income increased by 19% Y/Y largely driven by 16% Y/Y growth in fee income and gain on sale of securities worth PkR 367mn.

– The bank recognized a provisioning reversal of PkR 213mn during the quarter under review that lent further support to the earnings.

– Operating expenses slightly increased by 3%Y/Y to PkR10.1bn and the C/I ratio deteriorated to 47% in 1QCY21 as compared to 45% in corresponding period last year.

– Sequentially, the earnings jumped by 17% driven by reversal in provisioning and 10% increase in NFI.

– We have an Outperform rating on MCB with a target price of PkR215/sh. The stock is currently trading at one year forward P/Bv of 1.02x and offers a dividend yield of 10%.

KASB Research

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