MCB Bank managed to take profits up by 15% to Rs19.4 billion in 2011, but failed to cheer investors as they expected more from the financial giant.
The result was below market expectations as analysts expected net profit to stand, on average, around the Rs21 billion mark. Negative sentiments were reflected in the stock price which fell Rs6.35 to close at Rs179.39 during trade at the Karachi Stock Exchange on Tuesday.
The bank also announced final cash dividend of Rs3 per share, taking the cumulative dividend to Rs12 per share, along with a 10% bonus, says a notice issued by the bank. The bonus share is expected to help the Mansha-owned bank meet the State Bank of Pakistan’s minimum capital requirement of Rs9 billion for 2012. Of the big five banks, MCB Bank and Allied Bank barely met the capital requirement in 2011.
Earnings growth mainly stems from sharp improvement in net interest income, up 21% to Rs44.5 billion on better return on assets amid higher interest rates. The bank is likely to have booked accrued interest income of Rs700 million on government backed classified loans that were converted into Treasury Bills and Pakistan Investment Bonds bills during the last quarter.
Rise in non-interest income of 29% also supported bottom-line, thanks to overall improvement in trade activities along with higher dividend income booked in the first half of 2011.
However, operating expenses remained higher by 29% to Rs17 billion while total provisioning increased by 13% to Rs4.2 billion.
Provisions emerged as the key highlight of the result announcement, clocking in at Rs1.44 billion during the last three months (October to December) 2011 against expectation of Rs827 million, said Global Securities analyst Syed Saquib Ali. Provisioning expense swelled by an astounding 384% on a quarterly basis although it was down by 11% on a yearly basis.
Published in The Express Tribune, February 22nd, 2012.
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