MCB Bank (MCB): 4Q2024 Performance Review and Future Outlook

Introduction

MCB Bank has released its financial results for the fourth quarter of 2024, reporting consolidated earnings of Rs10.5 billion (EPS: Rs8.87). Despite a 38% YoY and 42% QoQ decline, the results aligned with industry expectations. This blog delves into key financial highlights, challenges, and growth prospects for MCB.

Earnings and Dividend Performance

For the full year 2024, MCB recorded earnings of Rs63.2 billion (EPS: Rs53.35), reflecting a modest 3% YoY decline. The bank announced a final cash dividend of Rs9/share, bringing the total dividend payout for 2024 to Rs36/share. This demonstrates MCB’s commitment to rewarding shareholders despite margin pressures.

Key Financial Metrics

Metric (Rs Mn)	4Q2024	4Q2023	YoY Change	2024	YoY Change
Net Interest Income (NII)	39,455	46,254	-15%	167,947	2%
Non-Interest Income	12,073	10,843	+11%	41,240	+17%
Profit After Tax (PAT)	10,637	16,930	-37%	63,466	-3%
Earnings Per Share (EPS)	8.87	14.24	–	53.35	–
Dividend Per Share (DPS)	9.00	9.00	–	36.00	–

Factors Affecting Performance

1. Higher Provision Expenses

MCB recorded Rs4 billion in provision expenses for 4Q2024, exceeding expectations. This was partially offset by Rs3.3 billion in gains from securities, helping to stabilize overall profitability.

2. Decline in Net Interest Income (NII)

NII dropped by 15% YoY and 12% QoQ, mainly due to declining asset yields. This reflects the impact of lower interest rates on MCB’s lending margins.

3. Inflation-Driven Cost Pressures

Non-interest expenses surged 20% YoY and 9% QoQ, leading to a higher cost-to-income ratio of 41% (up from 31% in 4Q2023). Inflationary pressures have contributed to this increased cost burden.

4. High Taxation Impact

MCB’s effective tax rate climbed to 61% in 4Q2024, significantly higher than 49% in 3Q2024. This contributed to the overall decline in net profits.

Future Outlook and Investment Perspective

Despite the challenges, MCB remains an attractive investment due to:

• Strong dividend yield of 13%.
• Stable business model despite margin pressures.
• Stock trading at a 2025E P/E ratio of 6.3x and PBV of 1.1x.

Given these factors, MCB continues to be a viable choice for investors seeking stability and consistent dividends.

Conclusion

MCB Bank faced headwinds in 4Q2024, including higher provisioning costs and lower NII. However, its strong dividend policy and strategic asset management reinforce its position as a resilient banking player. Investors should keep an eye on macroeconomic conditions and policy changes impacting the banking sector in 2025.