- MCB posts 28% higher earnings, dividend above expectations
- Bank reduced its Staff Cost by reducing increments
MCB Bank Limited (MCB) announced its 1st Quarter 2020 financial result, where it posted net profit of Rs. 6.5 billion (Earnings Per Share: Rs. 5.5) as against Rs. 5.1 billion (Earnings Per Share: Rs. 4.3) in the same period last year, up by 28%YoY.
MCB also announced first interim cash dividend of Rs. 5.0/share which is higher than the expectations.
The net earnings remain above market expectations due to low Operating Costs, higher fee and commission income, increased FX income and higher dividend income on Investment Portfolio. Resultantly, the non-funded income of the bank increased by 11% YoY during 1st Quarter to Rs. 3.9 billion.
Staff Cost Cut, other cost measures helped bank post record profit
Operating expenses of the bank remained in control as they grew only by 2%YoY to Rs. 8.6 billion. MCB is currently going through strict cost control measures, which is also impacting the remuneration of the Bank Staff. Many Staff members in touch with The Mint PK told that despite above average performance significantly lower Increment was passed on to the Staff in the annual Appraisal, especially at branch level despite record profit of the bank. Lower Bonuses were also handed out to most of the Retail Banking Staff to manage the Staff Cost.
Due to cost control measures, Cost-to-Income ratio decreased to 46% during the quarter.
MCB also reported a provisioning expense of Rs. 742million as compared to a reversal of Rs. 484million realized during the same quarter last year.
MCB remains most favored stock in the Pakistan Stock market, with cheaper valuations, higher earnings potential and Attractive dividend yield in long term.