The board of MCB Group met today and approved results for the first quarter ended September 2018. During this period, MCB Group profits reached Rs. 2.13 billion, which represents an increase of 26.6% with regards to the corresponding period in 2017.
Operating income went up by 19.2% to reach Rs 4,669 million, underpinned by enhanced performances across clusters. Net interest income rose by 25.2%, mainly reflecting the notable expansion in the international loan portfolio while an appreciable growth was also registered in income from domestic activities. Net fee and commission income increased by 5.7% despite a drop in wealth management fees, mainly supported by the growth in revenues from regional trade financing linked to the Energy & Commodities business as well as increased revenues from payment activities and MCB Capital Markets Ltd. ‘Other income’ recorded a growth of 12.5%, after factoring in the contribution from MCB Real Assets Ltd and a rise of 8.2% in profit on exchange and fair value gains on financial instruments.
In line with major capacity-building initiatives under way, operating expenses were up by 11.0%. The cost to income ratio, however, dropped further to 39.8% as compared to 42.8% for the corresponding period of last year. Asset quality continued to improve with the gross NPL ratio declining further to 4.3% and the cost of risk remaining stable at 61 basis points of gross loans and advances on an annualised basis. Our share of profit of associates grew by Rs. 52 million, reflecting improved performances of PAD Group and our foreign banking associates.
The Group remained well-capitalised, with the adoption of IFRS 9 having, in line with expectations, an impact of Rs 588.1 million on retained earnings with respect to impairment of financial assets. As at 30 September 2018, the BIS ratio improved slightly to stand at 17.5%, of which 15.4% in the form of Tier 1 Capital.
The results for the next quarter to December 2018 are expected to continue to benefit from the growth momentum of our loan portfolio and prospects beyond remain encouraging in view of our existing business pipeline.’’