This performance was underpinned by the continued growth in operating income, up by 7.3%. Net interest income rose by 5.7% mainly due to increased income from overseas activities of MCB Ltd and higher investment in Government securities amidst the persisting excess liquidity situation. Net fee and commission income grew by 6.4% on the back of increased revenues both at banking and non-banking levels. In addition, ‘Other income’ recorded a growth of 15.8%, largely supported by a rise of 13.1% in profit on exchange and net gain on financial instruments carried at fair value. 

 

Operating expenses were up by 7.0% reflecting capacity building initiatives implemented throughout the Group. Net impairment charges rose by Rs 68 million compared to the corresponding period of last year, representing 59 basis points of gross loans and advances on an annualised basis with the gross NPL ratio declining to 5.7%. 

 

Our share of profit of associates declined by Rs 70 million, reflecting reduced contribution from PAD Group and our foreign banking associates. 

 

Shareholders’ funds of the Group reached Rs 46.8 billion, resulting in an increase of our capital adequacy ratio to 18.6%, of which 16.2% in the form of Tier 1. 

 

Whilst the economic environment is expected to improve globally, our operating context is likely to remain challenging. Locally, the high liquidity conditions should continue to weigh down on our operations despite the recent drop in the Repo Rate and the anticipated pick up in investment in infrastructure projects while, regionally, our business pipeline remains encouraging.