MCB Bank’s Q1CY25 Profit Drops 17.78% to Rs14.65 Billion

MCB Bank Limited (PSX: MCB) reported a steep 17.78% year-on-year drop in profit attributable to equity shareholders for the first quarter ending March 31, 2025, posting a net profit of Rs14.65 billion (EPS: Rs12.36), down from Rs17.82 billion (EPS: Rs15.04) a year earlier. Despite the decline, MCB announced a robust interim cash dividend of Rs9 per share (90%), bolstering investor confidence. Following the results, MCB’s share price rose 0.42% to Rs286.67 on the Pakistan Stock Exchange, briefly hitting an intraday high of Rs294.

The earnings slump was driven by a 4.80% decline in total income, falling to Rs49.58 billion, primarily due to a 22.36% plunge in mark-up/interest income to Rs77.99 billion. Although interest expenses dropped 33.13% to Rs38.92 billion, this couldn’t offset the revenue shortfall, leading to a 7.52% decrease in net interest income to Rs39.07 billion.

Non-markup income provided a vital lifeline, growing 9.10% to Rs10.5 billion, fueled by a 93.91% surge in dividend income, 22.39% increase in foreign exchange income, and 45.65% jump in other income. Fee and commission income edged up 0.27%, but a net loss of Rs139.66 million on securities reflected investment volatility.

Cost pressures intensified, with non-markup expenses soaring 21.42% to Rs20.85 billion and core operating costs rising 23.47%. Provisioning skyrocketed, with credit loss allowances and write-offs surging 8,244% to Rs2.33 billion, hinting at heightened caution or a one-off hit. However, other charges and Workers Welfare Fund expenses fell 50.76% and 10.49%, respectively.

MCB’s share of profit from associates grew 18.35% to Rs492.95 million, offering some relief. Profit before tax declined 10.74% to Rs31.55 billion, with after-tax profit at Rs14.65 billion after a 3.87% reduction in tax expense. A 142.87% spike in non-controlling interest further eroded shareholder profits.

Despite the earnings setback, MCB’s consistent dividend policy and resilient non-markup income reassured investors, with the initial share price rally signaling market optimism for potential margin recovery or stabilized provisioning.