In our today’s morning briefing we would discuss the performance of MCB Bank Limited (MCB) in CY14 and would give recommendation to the investors.

Double digit growth in CY14: Primarily on back of higher interest and non-interest income, the profit after taxation (PAT) of MCB climbed by 13% YoY in CY14 to Rs 24,325 million (EPS: Rs 21.85) versus a PAT of Rs 21,495 million (EPS: Rs 19.31) in CY13. The bottom-line also taken a positive impact from reversal in provisions. In 4QCY14 alone, the company posted gigantic growth in earning mainly owing to significant growth in interest and non-interest income. The PAT of the bank totaled Rs 6,201 million (EPS: Rs 5.57) in 4QCY14 resulting in a hefty 44% YoY growth as against a PAT of Rs 4,313 million (EPS: Rs 3.87) in 4QCY13. The corporate results were accompanied with a final cash dividend of Rs 4/share in addition to already paid cash dividend of Rs 10/share during 9MCY14.

Net interest income elevates 15% YoY: The interest income of the bank totaled Rs 77,269 million in CY14 which is 19% YoY up from an interest income of Rs 65,064 million in CY13 on back of increased investments in Pakistan Investments Bonds (PIBs) and rise in earning assets. The interest expense too remained higher growing by 24% YoY in CY14 to Rs 33,757 million versus Rs 27,196 million in CY13 due to hike in minimum PLS saving rate. Therefore net interest income increased by 15% YoY in CY14 to Rs 43,512 million versus Rs 37,868 million in CY13.

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Further boost by non-interest income: As mentioned above that the bottom-line was also boosted by rise in non-interest income where it rose by 20%YoY in CY14 to Rs 13,435 million versus Rs 11,171 million in CY13. This impressive growth was primarily owing to growth in income from; fees, commission, dividend, and through sale of securities. On the other side due to efforts of the bank to recover loans, the bank witnessed reversal in provisions in CY14 also totaling Rs 1,450 million however it was less when compared to reversal in provisions of Rs 2,836 million in CY13.