MCB Bank’s Earnings Decline Amid Rising Administrative Expenses

Karachi: MCB Bank Limited reported its second-quarter financial results for the calendar year 2025, revealing a decline in net profit due to increased administrative expenses. The bank posted a net profit after tax of PKR 13.5 billion for the quarter, translating to earnings per share of PKR 11.4. This marks a 12% decrease from the same period last year and a 2% drop from the previous quarter.

The bank’s net interest income was recorded at PKR 36.2 billion, showing a slight increase from the previous quarter but a 2% decrease compared to the previous year. This was attributed to a decline in yields despite an increase in the asset book. The net interest margin for the quarter was estimated at 5.3%, down from 5.8% in the first quarter.

Non-interest income saw a decline as well, coming in at PKR 8.3 billion, reflecting a 9% year-on-year and a 10% quarter-on-quarter decrease. Fee income dropped by 13% both year-on-year and quarter-on-quarter, while dividend income rose by 30% year-on-year but fell by 50% from the previous quarter.

Operating expenses increased by 15% year-on-year, reaching PKR 17.5 billion, which contributed to a higher cost-to-income ratio of 37.9%. This compares to 31.5% and 38.2% in the second quarter of the previous year and the first quarter of this year, respectively.

The quarter saw a credit allowance/provisioning reversal of PKR 1.8 billion, contrasting with an expense in the same period last year and a higher reversal in the previous quarter. The effective tax rate for the quarter rose to 53.1%.

Despite the earnings decline, AKD Securities Limited maintains a ‘BUY’ stance on MCB Bank, citing strong capital buffers, clean asset quality, a leading current and savings account ratio in the industry, and stable cash payouts as reasons for their positive outlook. The bank also announced an interim cash payout of PKR 9.0 per share, bringing the half-year total to PKR 18.0 per share.