MCB Group posts profits of Rs 4.3 billion (+17.8%)

For first semester ended 31stDecember 2018:MCB Group posts profits of Rs 4.3 billion (+17.8%).

The Board of MCB Group Ltd met today and approved its unaudited results for first semester of FY 2018/2019, during which profits of Rs4.3 billion (+17.8%) were made.

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

‘‘Group profits for the six months to December 2018 increased by 17.8% to reach Rs 4,291 million, on the back of further headway being made in our international business activities, with foreign sourced banking earnings contributing 59% to profits.

This performance was driven by a rise of 24.7% in net interest income, supported mainly by the continued rise in the foreign loan book of MCB Ltd as well as higher average yields on investment securities during the period under review. Net fee and commission income rose by 12.1%, underpinned by strong performances relating to regional trade financing and payment activities in the banking cluster as well as increased revenues from MCB Capital Markets operations.

Notwithstanding an appreciable contribution from MCB Real Assets Ltd, ‘other income’ fell by 7.7%, with profit on exchange and fair value gains on financial instruments declining by 1.6% amidst volatility in the foreign exchange market whilst the results of 2017 had benefited from a contribution of Rs 191 million following the disposal of investments by MCB Equity Fund. In line with significant investments to boost internal capabilities, operating expenses were up by 9.4%, with our cost to income ratio, however, falling to 39.9% as compared to 42.5% for the corresponding period in the previous year.

Net impairment charges stood at Rs 793.4 million, with the cost of risk remaining the same as last year at 64 basis points of gross loans and advances on an annualised basis, whilst asset quality improved with the gross non-performing loan ratio reaching 4.2%. In spite of improved results from SG Moçambique and Promotion and Development Group, our share of profits of associates declined by Rs 35 million following reduced profitability of BFCOI, further exacerbated by weakness of the euro. Shareholders’ funds posted a year-on-year growth of 7.9% to reach Rs 52.5 billion, with our capital adequacyratio improving to 17.6% compared to the end of the last financial year, of which 15.7% in the form of Tier 1. In spite of the recent downgrade in the world economic outlook, prospects for the Group remain encouraging in view of our existing business pipeline. On this basis, full year results are projected to post a healthy growth compared to last year.’’

HIGHLIGHTS
Increase of 24.7% in net interest income
Net fee and commission income up by 12.1%
‘Other income’ down by 7.7%, following a drop ingains on sale of securities
Rise of 9.4% in operating expenses Impairment charges higher by Rs 165 million, with gross NPL ratio declining to 4.2%
Share of profit of associates lower by Rs 35 million Y-o-y growth of 5.9% in deposits and of 24.5% in gross loans

PROFIT ATTRIBUTABLE TO SHAREHOLDERSRs 4,290.9 m (+17.8%)
OPERATING INCOMERs 9,609.5 m (+ 16.6%)
ASSETS Rs 417.2 bn (+ 12.9%)