April 23, 2025 – MCB Bank Limited (PSX: MCB), one of Pakistan’s leading financial institutions, has reported a significant decline in its profitability for the quarter ending March 31, 2025. According to its consolidated financial results, the bank’s profit attributable to equity shareholders fell by 17.78% year-on-year, amounting to Rs14.65 billion [EPS: Rs12.36], compared to Rs17.82 billion [EPS: Rs15.04] during the same period last year.
Despite the profit slump, the bank announced an interim cash dividend of Rs9 per share, representing a 90% payout—an indicator of continued commitment to shareholder returns amid challenging economic conditions.
The downturn in profitability was primarily driven by a 4.80% reduction in total income, which dropped to Rs49.58 billion from Rs52.07 billion a year earlier. A major contributing factor was the steep 22.36% decline in mark-up/interest earned, which came in at Rs77.99 billion compared to Rs100.44 billion in the previous year.
Although mark-up/interest expenses fell by 33.13%, standing at Rs38.92 billion, the net impact still led to a 7.95% drop in net mark-up/interest income, which settled at Rs39.07 billion.
On the non-markup income front, the bank managed a 9.10% increase, reaching Rs10.5 billion, showcasing resilience in some revenue streams. Within this category, dividend income soared by 93.91%, while foreign exchange income rose by 22.39%, and other income climbed 45.65%. Fee and commission income, however, saw a slight decline of 2.68%. The bank also recorded a net loss on securities amounting to Rs139.66 million, which further weighed on overall income.
At the same time, MCB’s non-markup expenses increased sharply by 21.42% to Rs20.85 billion, driven mainly by a 23.47% jump in operating expenses. Nonetheless, the bank did manage to curb some costs, with Workers Welfare Fund expenses declining by 10.49% and other charges plummeting by 50.76%.
Another notable figure in the report is the massive surge in credit loss allowance and write-offs, which spiked over 8,244% to Rs2.33 billion. This suggests heightened caution in asset quality, possibly reflecting macroeconomic stress or tighter regulatory oversight.
MCB’s share of profit from associates grew by 18.35%, contributing Rs492.95 million to the bank’s overall earnings, offering a slight buffer to the otherwise downward trend.
As a result, profit before taxation declined by 10.74%, settling at Rs31.55 billion, down from Rs35.35 billion in the same quarter last year. Even with taxation decreasing by 3.87% to Rs16.82 billion, it wasn’t enough to offset the overall earnings decline.
Factoring in the 142.87% increase in non-controlling interest, net profit attributable to equity shareholders came to Rs14.65 billion, cementing the 17.78% year-on-year decrease.
MCB’s quarterly performance reflects the dual pressures of declining interest-based revenues and rising operational costs. While gains in non-interest income and associate earnings offered some reprieve, the increased provisioning and loss on securities highlight a more cautious and challenging operating environment for the bank going forward.
As the financial sector grapples with economic volatility, MCB’s results underscore the importance of strategic cost management and income diversification to maintain profitability in uncertain times.