MCB Bank posts higher Q4 profit, full-year earnings fall

MCB Bank Ltd. has announced its consolidated financial results for the fourth quarter of 2025, reporting earnings of PKR 14 billion, translating into earnings per share of PKR 11.9.

Profit rose 34% year on year but declined 7% quarter on quarter, mainly due to higher-than-expected operating expenses.

For the full year 2025, the bank posted earnings of PKR 58.4 billion (EPS: PKR 49.29), down 8% from a year earlier.

Net interest income for the quarter stood at PKR 41 billion, up 5% year on year and largely flat compared with the previous quarter. On a quarterly basis, NII edged down 0.4% as investments continued to reprice downward, partially offset by 2.1% quarter-on-quarter deposit growth.

Noninterest income declined 7% year on year to PKR 11.2 billion in 4Q2025, primarily due to lower capital gains on investments. However, it increased 10% sequentially, supported by higher dividend income.

Fee income rose sharply by 18.9% quarter on quarter, driving an overall 9.6% quarter-on-quarter increase in noninterest income, although full-year fee income remained 1.8% lower year on year amid intense competition.

Profit

The bank’s share of profit from associates came in at PKR 598 million, down 27% year on year and 42% quarter on quarter.

Operating expenses increased during the quarter, pushing the cost-to-income ratio to 41.4%, compared with 39.0% in the same period last year.

Administrative expenses rose 5.5% quarter on quarter, contributing to a 7.1% sequential decline in quarterly profit to approximately PKR 14.1 billion.

Provisioning expense amounted to PKR 292 million in 4Q2025, significantly lower than the PKR 4 billion recorded in 4Q2024 and compared with a reversal of PKR 1.2 billion in the previous quarter. The effective tax rate stood at 53%, unchanged from 3Q2025 but lower than 61% in 4Q2024.

For the full year, deposits grew 9.5% year on year on an adjusted basis, trailing the industry average growth of around 16% to 17%. Net interest income declined 4% year on year in 2025, reflecting an 8.3 percentage-point reduction in the average policy rate during the year.

Dividend

Dividend income rose sharply by 90% year on year to PKR 1.7 billion, while foreign exchange income increased 42% year on year to PKR 2.5 billion. The revaluation surplus increased 25% quarter on quarter to PKR 74.8 billion in 4Q2025, lifting book value per share by 6.5% quarter on quarter to PKR 285.

Alongside the results, MCB announced a cash dividend of PKR 9 per share for the quarter, in line with expectations. This takes the total dividend for 2025 to PKR 36 per share, unchanged from last year and consistent with the bank’s stable payout policy.

The bank’s shares are currently trading at a forward price-to-earnings multiple of about 8.0x and a price-to-book ratio of around 1.4x to 1.5x on 2026 estimates, offering a dividend yield in the range of 8.6% to 9%.

Looking ahead, analysts expect earnings growth to resume gradually as the interest rate repricing cycle largely concludes. While one view maintains a buy stance on the stock, citing attractive valuations and yield, the broader outlook remains neutral, with a fair value estimated at around PKR 400 per share.