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12 May 2017

MCB Group profits reach Rs. 5.2 billion (+10.4%)


Financial results as at 31st March 2017 (9 months)

The Group continued to post a resilient performance with attributable profits for the nine months to March 2017 growing by 10.4% to reach Rs 5,189.5 million, albeit boosted by a net gain of some Rs 260 million relating to the disposal of an investment by our Equity Fund. Excluding the latter, the growth in profits would stand at around 5%. Results were underpinned by a further rise in operating income. Net interest income grew by 7.0%, mainly attributable to higher investment in Government securities in a context of persisting excess liquidity, coupled with improved yields thereon. Net fee and commission income recovered and posted a growth of 4.8%, supported by higher receipts both at banking and non-banking levels.

Other income rose by 38.3%, driven by the above-mentioned exit from an equity investment, a rise of 26.3% in profit on exchange and improved performance of non-banking business lines. Operating expenses were up by 10.6% driven primarily by capacity-building initiatives throughout the Group. The cost to income ratio, however, dropped slightly to attain 40.8%. Gross NPL ratio declined to 5.8%, while net impairment charges grew by 12.0% to reach Rs 812 million, representing 60 basis points of gross loans on an annualised basis. Our share of profit of associates dropped by Rs 162 million mainly due to lower contributions from PAD Group which benefited from significant non-recurrent gains in the previous year. Improved results coupled with a modest growth in risk weighed assets contributed to further enhance the Group’s capital adequacy ratio which stood at 18.5%, of which 16.1% in terms of Tier 1.

Outlook
Looking ahead, Group results for the year to June 2017 are expected to grow satisfactorily, albeit at a slower pace than the growth registered during the first nine months of the year given the significant non-recurrent gains recorded in the last quarter of the previous financial year. The prospects beyond look relatively encouraging in view of the improvement in our pipeline of private sector and cross-border projects and the expected recovery in the international and local economic context, although domestic growth in the short term will remain dependent on the implementation pace of public infrastructure projects.

Read the Group Management StatementPDF 572KB