⚡ Flash Summary

MCB Bank Limited reported a Profit Before Tax (PBT) of Rs. 29.42 billion for Q3 2025, leading to a cumulative nine-month PBT of Rs. 87.48 billion. Profit After Tax (PAT) reached Rs. 41.10 billion, resulting in Earnings Per Share (EPS) of Rs. 34.68. Net interest income saw a 5.8% year-on-year decline, attributed to monetary easing, though partially offset by strategic low-cost deposit mobilization. Despite a decrease in non-markup income, the bank declared a third interim cash dividend of Rs. 9.00 per share, bringing the total to Rs. 27.00 per share for the nine-month period.

📌 Key Takeaways

• ⚠️ Net interest income declined 5.8% year-on-year due to monetary easing.
• 💰 Non-markup income decreased 3.1% year-on-year to Rs. 26.0 billion.
• 🏠 Fee and commission income dropped 15% to Rs. 13.98 billion amid heightened competition.
• 💱 Foreign exchange income increased 5% to Rs. 7.9 billion.
• 📊 Dividend income surged 30% to Rs. 3.2 billion.
• 📱 Card-related income grew 18% year-on-year, fueled by increased transaction volumes.
• 🏦 Branch banking fee income rose 14% driven by better customer engagement.
• ⬆️ Operating expenses increased 14.6% year-on-year reflecting technology and talent investments.
• 📉 Cost-to-income ratio remained healthy at 37.65% despite expense growth.
• 💪 Total assets grew 20% to Rs. 3.23 trillion, driven by a 72% increase in net investments.
• 📉 Gross advances decreased 38% reflecting cautious lending.
• ✅ Asset quality remained strong, with non-performing loans at Rs. 50 billion (infection ratio 7.35%, coverage ratio 92.24%).
• 🏦 Deposits closed at Rs. 2.23 trillion, boosted by a Rs. 272 billion increase in current deposits.
• 💸 Domestic cost of deposits declined significantly to 5.01% from 10.47% in 2024.
• 💹 ROA reported at 1.85%, ROE at 23.50%, and Book Value per Share improved to Rs. 201.85.

🎯 Investment Thesis

Based on the announcement, a HOLD recommendation is appropriate for MCB Bank. The bank shows a robust balance sheet, but revenue growth is limited by external economic factors (monetary easing impact on net interest income). The consistent dividend payout provides downside protection. A price target would depend on a full discounted cash flow valuation. This is a medium term view.