Muslim Commercial Bank (MCB) has maintained its modest profit growth of 6.20% in 2021. The bank’s profit surged to a record all-time high of Rs. 30.8 billion in the outgoing year, translating into Earning Per Share (EPS) of Rs. 26.00 compared to Rs. 29 billion recorded in 2020 with an EPS of Rs. 24.50.
The bank posted the highest ever Profit Before Tax of Rs. 51.989 billion for the year 2021, coupled with the highest dividend per share in the banking sector.
The average policy rate registered a decline of 19 percent (166bps) from an average of 8.95 percent in last year to 7.29 percent in the current year. However, on account of strategically aligned growth in average current deposits and a balanced mix of earning assets, the net interest income of the bank decreased by only 10 percent, from Rs. 71.33 billion to Rs. 63.99 billion.
Non-markup income registered a growth of 11 percent and aggregated to Rs. 20.1 billion against Rs. 18.1 billion in last year. Improved transactional volumes, surge in business activities, diversification of revenue streams through continuous enrichment of bank’s product suite, investments towards digital transformation, and an unrelenting focus on upholding the high service standards supplemented a growth of 14 percent in fee income, whereas dividend and foreign exchange incomes increased by 86 percent and 48 percent respectively.
On the provision front, proactive monitoring and recovery efforts led to a net reversal of Rs. 910 million in specific provision maintained against non-performing loans (NPLs), while the general loss reserve of Rs. 4 billion created amid the uncertainty surrounding the COVID-19 outbreak was reversed, as the systematic risks surrounding the economic recovery have receded and the bank has created specific provision against exposures that reflected signs of financial distress.
Persistent focus on maintaining a robust risk management framework encompassing structured assessment models, effective pre-disbursement evaluation tools, and an array of post disbursement monitoring systems has enabled MCB to effectively manage its credit risk. The Non-performing loan (NPLs) base of the bank recorded a decrease of Rs. 698 million and was reported at Rs. 50.49 billion.
The bank has not taken FSV benefit in the calculation of specific provision and carries an un-encumbered general provision reserve of Rs. 636 million. The coverage and infection ratios of the bank were reported at 90.83 percent and 7.94 percent, respectively.
On the financial position side, the total asset base of the bank, on an unconsolidated basis, was reported at Rs. 1,970 billion (+12 percent). The gross advances of the bank registered historic growth of Rs. 122 billion (+24 percent), above the industry growth, to close the year at Rs. 636 billion. The corporate lending book grew by Rs. 106 billion (31 percent) whereas the consumer loan portfolio garnered significant interest and increased by Rs. 9.5 billion (32 percent) on the back of significant activity in the construction and auto segments.
On the liabilities side, achieving growth in a no-cost current account base remained a key strategic objective for the bank. Thereby, non-remunerative deposits grew by 15.1 percent to close at Rs. 563 billion; improving their mix in the total deposits to 40 percent in absolute terms as of December 31, 2021. CASA mix was reported at 93 percent, whereas the total deposits of the bank grew by 9 percent to close out the year at Rs. 1,412 billion.
Return on Assets and Return on Equity were reported at 1.65 percent and 19.11 percent respectively, whereas the book value per share was reported at Rs. 135.13.
During the year, MCB attracted home remittance inflows of USD 3.527 billion to further consolidate its position as an active participant in SBP’s cause for improving the flow of remittances into the country through banking channels. The inflow by MCB till December 31, 2021, under the Roshan Digital Account (RDA) initiative, has stood at $216 million.
The bank, on a consolidated basis, is operating the 2nd largest network of more than 1,600 branches in Pakistan. The bank remains one of the prime stocks traded in the Pakistani equity market with 2nd highest market capitalization in the industry.
The board of directors has declared a final cash dividend of Rs. 5.0 per share, i.e., 50 percent bringing the total cash dividend for the year ended 2021 to 190 percent, continuing with its highest dividend per share trend in the banking sector.
Source: Pro Pakistani