May 11, 2022 (MLN): MCB Bank Limited is close to making a decision on a possible acquisition of Easypaisa and the announcement in this regard is expected within the next 15 days, the company’s management informed during a briefing. business.
Management has indicated that the bank is likely to maintain a dividend payout ratio whether or not the acquisition goes through, according to key takeaways covered by Topline Securities.
The bank had won net profit of 9.1 billion rupees (EPS: Rs 7.66) for the quarter ended March 2022, 29.4% higher than the net profit of Rs 7 billion recorded in the corresponding period of the previous calendar year, mainly due to higher other income, a reversal of provisions and higher net interest income (NII).
Thanks to strong current account volumetric growth, 1QCY22’s net interest income increased by 19% compared to the corresponding period last year. Working on a well-defined strategy, the bank’s average current deposits recorded a growth of Rs71.3 billion (+14%), compared to the corresponding period of last year.
Within the investment portfolio, fixed GDP is PKR 266 billion (37% of total GDP), yielding around 10.5-10.6%, with a maturity of 2.9 years, while Overall GDP report 10.3%. Similarly, the treasury bond book stands at 418 billion rupees, yielding around 9.92%. The bank’s overall NIMs are expected to remain stable at 2QCY22 and are expected to improve in the third and fourth quarters, due to the full repricing of advances and investments.
The banking sector as a whole is experiencing strong growth in foreign exchange revenues driven by exchange rate volatility.
However, management does not expect a significant impact on banks’ earnings from the fall in Pakistani Eurobond prices, as the bank tests the instruments for impairment if the value falls by 30% or more, it said. she added.
Management expects even better numbers for FX revenue in 2QCY22 due to volatility in FX markets in the quarter so far.
Regarding exposure to Sri Lanka Development Bonds (SLDBs), management stated that they currently hold no exposure to SLDBs, therefore no material default impact is expected on their books.
Regarding the interest rate outlook, management expects monetary tightening to continue and another 100-150 basis points cannot be ruled out as the gap between the policy rate and the KIBOR further widened due to rising inflation expectations.
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