Analyst
Muhammad Obaid
muhammad.obaid@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
PACRA Maintains Entity Ratings of MCB Bank Limited
Rating Type | Entity | |
Current (27-Dec-18 ) |
Previous (27-Jun-18 ) |
|
Action | Maintain | Maintain |
Long Term | AAA | AAA |
Short Term | A1+ | A1+ |
Outlook | Stable | Stable |
Rating Watch | - | - |
The ratings take note of MCB's sustained financial profile, reflected in very strong capitalization, sound liquidity and diverse deposit base. This has been enabled by the bank's able parentage, wherein a diverse mix of sponsors - mainly led by Nishat Group - have been providing an effective oversight. The ratings factor in MCB's strong market positioning, supported by its well established brand name and substantial out-reach. MCB has one of the highest CASA in the industry, with lowest cost of funds amongst all players. The bank has added a sizeable chunk to its deposit base. The bank continues with its current strategy of lending to premier corporates with sustained focus on government exposure. Lately, the bank has added momentum to its growth trajectory. The bank has established an Islamic Banking subsidiary, thereby, becoming the first conventional bank to do so.
The ratings are dependent on the bank's ability to hold its existing position in the banking sector. Any deterioration in the perceived strength of the bank or ownership with consequent impact upon its governance efficacy would have negative implication. Further strengthening of human resource would be vital.
About
the Entity
MCB Bank is the fourth largest bank in terms of its share in total customer deposits (8% at end-Sep18) in the country. The bank is operating with a distinct domestic franchise, having 1,356 branches. Compared to its peers, MCB Bank has limited overseas operations. MCB Bank is majority owned by Nishat group (~36%), a prominent business conglomerate, having diversified interests in Textiles, Cement, Banking, Insurance, Power Generation, Hotel Business, Agriculture, Dairy, and Paper Products. Malayan Banking Berhad (Maybank) of Malaysia has ~19% stake in MCB. A set of prominent domestic industrial groups also own a sizeable stake in the Bank. Nishat group, in addition to MCB Bank, has strong presence in entire spectrum of financial services - Adamjee General Insurance; Adamjee Life Assurance; MCB Islamic Bank Limited and MCB-Arif Habib Savings and Investments Limited. The spectrum is gradually building synergistic benefits.