Commenting on the results, Pierre Guy Noël (Chief Executive - MCB Group Ltd) said:

 

“Group profits attributable to ordinary shareholders grew by 19.1% to Rs 7,223 million for the nine months to 31 March 2022, reflecting improved operating results across clusters and a drop in impairment charges.

 

Operating income rose by 7.3% to Rs 17,986 million. Despite significant growth in average interest-earnings assets, net interest income increased by only 2%, being impacted by lower yields derived from the deployment of excess rupee liquidity and lower margins on the international loan book, which experienced a shift in its mix towards short-term advances and commodity trade finance loans. Net fee and commission income grew by 32.0% to Rs 4,411 million, boosted by higher fees from regional trade financing and payment activities in the banking cluster as well as increased revenues from the non-banking segment. On the other hand, ‘Other income’ fell slightly with the increase in profit from foreign exchange transactions being offset by a drop in income from trading activities and fair value losses on financial instruments due to market volatility.

 

Operating expenses increased by 10.2% to Rs 6,863 million on the back of ongoing investment in human capital and technology notably linked to our digitalisation efforts, resulting in a rise in the cost-to-income ratio from 37.1% to 38.2%. Impairment charges declined by 16.6% to Rs 2,861 million, representing an annualised cost of risk of 99 basis points of gross loans and advances. The gross non-performing loan ratio stood at 3.9%.

 

The share of profit of associates grew by Rs 348 million on account of an improvement in results across associated entities.

 

Our capitalisation level remains comfortable with shareholders’ funds increasing to Rs 78.3 billion, contributing to a capital adequacy ratio of 18.3%, of which 17.0% in the form of Tier 1.

 

The Russia-Ukraine conflict has weakened prospects for the global economy, which is yet to fully recover from the pandemic. The crisis has exacerbated existing supply chain disruptions, with the resulting surge in commodity prices fuelling heightened global inflationary pressures, thus prompting many central banks to tighten monetary policy earlier than planned. At the domestic level, notwithstanding  encouraging signs in the tourism industry, the war is weighing on the strength of the recovery due to lower growth in key trading partners and the impact of the sharp rise in inflation. Whilst this highly uncertain operating environment has compounded challenges faced by the Group, the latter remains focused on implementing its growth agenda, aimed at further diversifying its revenue lines and supporting the local economic rebound and transformation. The Group will accordingly continue to invest in reinforcing its enabling capabilities while upholding its financial soundness.”