Credit Suisse rates MCB Bank as the best bank in Pak­istan

The Pak Banker - - FRONT PAGE - Staff Reporter

Credit Suisse, one of the most pres­ti­gious fi­nan­cial com­pany in the world, has rated MCB Bank as the best bank in Pak­istan and among the best three banks in Asia Pa­cific re­gion.

Credit Suisse is head­quar­tered in Zurich and its In­vest­ment Re­search is con­sid­ered to be one the most cred­i­ble source of fi­nan­cial in­for­ma­tion for in­vest­ment op­por­tu­ni­ties in the world.

Ac­cord­ing to the re­port, MCB is the best sav­ing de­posit fran­chise in Asia with de­mand de­posits and sav­ing de­posits con­sti­tut­ing 38% and 54%, re­spec­tively, of to­tal de­posits; has the best op­er­at­ing ef­fi­ciency among PK banks (cost-to-in­come ra­tio of 36.5%) and also one of the best in Asia; has the best as­set qual­ity man­age­ment track record among PK banks with the low­est non­per­form­ing loan ra­tio of 5.8%; and the best cap­i­tal ra­tio among PK banks with Tier 1 cap­i­tal ra­tio of 16.5%.

In Asia, MCB is the best de­posit fran­chise ( CASA 92 per­cent), and has some of the widest net in­ter­est mar­gins (5.41 per­cent in 2015), se­cond low­est LDRs (43 per­cent) and third best ROAs (2.6 per­cent in 2015).

They rated MCB ba­si­cally, a very high- qual­ity and con­ser­va­tive bank, which can be con­sid­ered a bond fund (raises de­posits at an av­er­age ~3.3 per­cent, in­vests in govern­ment bonds yield­ing ~8.3 per­cent gain­ing a risk free spread of 5 per­cent).

The re­port also said that Pak­istan has en­joyed a sub­stan­tial re­duc­tion in the cost of equity since 2013 on the back of an im­prov­ing political en­vi­ron­ment. '

The pro-busi­ness ap­proach of the new govern­ment helped sen­ti­ments fur­ther. The im­prov­ing macro back­drop made PK banks the best per­form­ers in Asia over the past three years and se­cond-best in the past five years,' the re­port added. Earn­ing high-teen ROEs de­spite the sharp de­cline in mar­gins over the past few years, MCB is avail­able for 1.4x book (May­bank bought 20 per­cent stake in 2008 at 5.1x book). 'We con­sider MCB among top three banks in Asia and com­pare it with HDFC Bank and BCA,' stated the re­search re­port.

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