Karachi: MCB Bank convened its Corporate Briefing Session to discuss the financial performance for the third quarter of 2026 and outline future expectations. The management anticipates a compression in net interest income in the fourth quarter of 2026 due to the recent 50 basis point policy rate increase, impacting deposit and borrowing costs. Despite this, the banking sector's overall net interest income is expected to remain robust.
According to JS Global, the end of the State Bank of Pakistan's remittance incentive scheme is projected to increase MCB's quarterly expenses by Rs400 million in the fourth quarter of 2026. This is based on MCB holding a 10% share of the industry's remittance volume. The associated rebate expense is recorded in Foreign Exchange Income on a net basis, resulting in pressure on FX income and annual rebate expenses of Rs6-7 billion.
The bank's total deposits rose by 20% from December 2025, reaching Rs2.7 trillion by September 2026. Current account deposits increased by 15%, bringing the current account mix to 52% in September from 54% in December. The average current account mix improved to 53% in the first nine months of 2026 compared to 51% in the same period in 2025. MCB aims to keep the current account mix above 50% while growing its deposit market share, which increased to 6.03% in the third quarter of 2026 from 5.38% in the fourth quarter of 2025.
During the first nine months of 2026, MCB added 31 branches and plans to expand by another nine branches in the fourth quarter, totaling 40 new branches for the year. The bank targets an addition of 50-60 branches in 2027.
On investments, 52% of the bank's portfolio consists of floating-rate Pakistan Investment Bonds (PIBs), with 25% in fixed-rate PIBs. A portion of the floating-rate PIB portfolio is due for repricing in October, with more repricing expected in the following months. The fixed-rate PIB portfolio has a weighted average maturity of 2.06 years, while spreads on floating-rate PIBs stand at about 99 basis points over the benchmark.
MCB reported a cost-to-income ratio of 38.6%, below its targeted 40%. Operating expenses increased by 10% year-over-year due to a rise in compensation expenses, reflecting higher staff costs and an expanded Retail field force. The bank remains committed to keeping the cost-to-income ratio below 40%.
The management foresees a positive impact of Rs700 million to Rs1 billion from relaxed minimum deposit rate requirements, having reduced deposit rates by up to 1% for certain customers, though benefits vary across deposit categories.
MCB's capital adequacy ratio stood at 18.99%, well above the regulatory requirement of 11.5%. A 100 basis point interest rate increase could lead to an estimated Rs10 billion mark-to-market loss, reducing capital by Rs5 billion and the CAR by approximately 0.3%.
JS Global maintains a buy stance on MCB, with the stock trading at a 2026 estimated price-to-earnings ratio of 7.4x, a price-to-book value ratio of 1.3x, and a dividend yield of 10%.