Karachi, February 20, 2023 (PPI-OT): MCB: Key takeaways from CY22 Corporate Briefing session

Consolidated EPS for CY22 clocked in at Rs29.00, +10% YoY over 40% YoY higher Net Interest Income and 23% YoY Non-Interest Income. DPS for the year accumulated to Rs20.00, as 4QCY22 DPS was announced at Rs6.00.

Fee Income increased by 14% YoY in CY22, while Admin expenses witnessed a higher increase of 18% YoY over inflationary pressures.

On the balance sheet front, asset size increase was limited to 6% YoY, as the bank reduced deposit size to meet ADR requirements.

CY22 deposits decreased by 2% YoY, while current account increased by 21% YoY, taking mix to 49% on the back of various strategies focusing conversion of remunerative deposits towards zero-cost deposits. The management targets to take the mix above 50%.

Advances increased by 28% YoY, meeting compliance to maintain Gross ADR above 50% in order to avoid higher taxation on income from federal government securities. This would take effective tax rate to 43% (39% Corporate Tax + 4% Super Tax) from 1QCY23.

On the Investment front, 30% of the book consists of Fixed PIBs, 53% of Floater PIBs and 13% of TBills. Almost 38% of the Investment book is scheduled to re-price during 1QCY23. The management intend to continue remaining invested in shorter tenor instruments.

As at CY22 end, total CAR was reported at 18.8%. Given comfortable CAR, management guided probability of dividend may increase in CY23.

Regarding IFRS 9 implementation, management apprised the one-time impact on equity will be ~Rs6.5bn, while there would be a slight positive impact on adequacy ratios. Moreover, almost 85% of MCB’s Performing Loan book would be placed under Stage 1 category.

Management expects PKR/US$ to range between 265 – 275 in the near future, following 6% to 7% devaluation.

On Policy Rate, management expects another 150bp hike, peaking at 18.5% and remaining at these levels for at least the remainder of CY23.