MCB Bank: Announcement update……CY11 PE 7.6x

MCB Bank: Announcement update……CY11 PE 7.6x

MCB Bank Ltd has announced its 1HCY11 results showing an EPS of Rs 12.64/sh as
against Rs 9.5/sh in the corresponding period last year. MCB’s profit after tax mounted
to Rs 10.57bn as against Rs 7.94bn in the same period last year showing Y‐o‐Y growth of
33%. Interim dividend of Rs 3/sh has also been announced, which accumulated with 1Q
dividend became a total dividend of Rs 6/sh. (6 monthly div. yield – 3.1%)


Better NIMs…


Net Interest Income (NII) maintained its pace demonstrating y‐o‐y increase of 25.6%
mounting Rs 22.23bn (CY10: Rs 17.7bn); on account of High Net Interest Margins (NIM)
which stood at 7.9% in CY10 translating a highest NIM among big five banks.
Likewise to all the other big banks that are now preferably investing more in government
papers, growth in NII may have been mostly contributed by the yields of government
papers.


Provisions increased

MCB’s non performing loans (NPL) began to cumulate with high velocity. This was same
for MCB, who experienced a rise in provisions by 18.3% y‐o‐y.


Riding on non core income….


MCB being one of the premier banks in Pakistan is riding on better technology initiatives
thus recorded a healthy increase of 38.8% y‐o‐y basis in non core operations which is
forming a 33% part in overall profits (1HCY10: 31%). Apart from trade finance operations
bank also made gains via ‘investment oriented’ equity markets.


MCB to trade on requisite PE


We like MCB which is yielding 7.6x CY11 PE. We will come up with a detailed overview on
MCB once detailed 1HCY11 accounts are unveiled.