Karachi: MCB Bank Limited has announced its financial results for the first quarter of 2025, revealing a 17% decline in profit compared to the same period last year. The bank reported a profit of PkR13.8 billion, or PkR11.7 per share, which fell slightly below market expectations due to reduced net interest income (NII). Despite this, the bank declared an interim cash dividend of PkR9.0 per share.

The bank's NII was reported at PkR35.2 billion, marking an 8% year-over-year decrease. This decline was primarily driven by a 22% drop in mark-up earned, attributed to reduced yields on investments and advances. Consequently, the bank's net interest margin fell to 6.6% from 8.5% in the same quarter last year.

Non-interest income showed a modest increase of 1% year-over-year, reaching PkR9.2 billion. The slight improvement was supported by a significant rise in dividend income, which offset a decrease in fee income. However, non-interest income was down 13% compared to the previous quarter.

The bank recorded a provisioning reversal of PkR2.5 billion, a notable change from the previous year's reversal of PkR69 million and an expense of PkR3.7 billion in the last quarter of 2024. Operating expenses rose by 22% year-over-year, amounting to PkR17.0 billion, resulting in a cost-to-income ratio of 40%.

The effective tax rate for the quarter increased to 52.9%, reflecting adjustments in tax rates for banks that began last year. Despite the earnings decline, the bank maintained its dividend payout ratio at 77% for the first quarter.

Market analysts have a 'BUY' stance on MCB Bank, with a target price of PkR398 per share by December 2025, and a dividend yield of 12.6% over the period.