MCB Bank Limited (MCB), Key Updates from Corporate Briefing

MCB Bank Limited (MCB) recently held its corporate briefing to share financial results for the second quarter of 2025 and what lies ahead. Here are the main highlights in simple words:

Stronger deposit mix

Current Accounts (the cheapest form of deposits for banks) now make up 54% of total deposits, up from 49% at the end of 2024. This is good news because it lowers the bank’s funding costs. Thanks to this, the cost of deposits fell to 4.9% in June 2025 vs 10% a year earlier.

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Loans (advances) down

The bank’s lending portfolio dropped 37% YoY to PKR 658bn, while the overall industry declined only 15%. This means MCB’s market share of loans fell to 4.9%.

Borrowings rising

MCB increased its borrowing through the central bank’s OMO facility to PKR 578bn (vs PKR 185bn at Dec 2024). The cost is around 11.1%.

Interest rate outlook

Management expects rates to stay stable for now, but sees room for another 50bps to 100bps cut later in 2025.

Asset quality

No major loan losses are expected in the coming quarters; in fact, reversals may happen.

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Branch network

The bank may open a few new branches in strong business areas, but overall focus remains on optimizing existing ones.

Costs and efficiency

Cost-to-income ratio is now 38% (vs 31% last year). Management aims to keep this below 40% going forward.

Remittance business under pressure

MCB faced a PKR 1.2bn loss on remittance commissions in 1H2025 due to rising competition. Last year, the same segment had generated income of PKR 820mn. Management expects this to improve in the future.

Valuation & outlook

Despite challenges, MCB remains attractive:

• PE ratio: 7.9x (cheap compared to peers)
• PBV ratio: 1.4x
• Dividend yield: ~10%

Analysts maintain a Buy stance on the stock, expecting steady dividends and long-term stability.

Source: Topline Securities

⚠️ This post reflects the author’s personal opinion and is for informational purposes only. It does not constitute financial advice. Investing involves risk and should be done independently. Read full disclaimer →