MCB Bank weighs to boost its sub­sidiary busi­ness

The Pak Banker - - FRONT PAGE - Muham­mad Yasir

The ex­pan­sion plan of MCB Bank with its sub­sidiary Is­lamic Bank and ac­qui­si­tion of NIB Bank may bode well for the busi­ness of its sub­sidiary MCB-Arif Habib Sav­ings and In­vest­ments Lim­ited (MCBAH) hav­ing Rs 70 bil­lion port­fo­lio of four­teen mu­tual funds. MCB Bank holds ma­jor­ity stake of 51 per­cent in the com­pany, fol­lowed by Arif Habib Cor­po­ra­tion Lim­ited with 30 per­cent shares. The com­pany is manag­ing four­teen open end mu­tual funds along with two pen­sion schemes with AUMs of Rs 49 bil­lion at end-Feb16. MCBAH also man­ages a SMA port­fo­lio of Rs 19.15 bil­lion.

MCB, the fourth largest bank in Pak­istan in terms of as­set size and branch net­work, has a very strong fi­nan­cial po­si­tion but the pos­si­ble merger of bank with NIB Bank will push its po­si­tion to sec­ond largest af­ter Habib Bank Lim­ited in terms of branches and de­posits.

Ac­cord­ing to an­a­lysts, a well-di­ver­si­fied fund slate along with a con­sis­tent growth in AUMs bodes well for the com­pany's rev­enue stream. The in­creased con­tri­bu­tion of re­tail in­vestors ben­e­fit­ting through the com­pany's iconic mes­sage 'Bachat Ka Doosra Naam' helps in pro­vid­ing sus­tain­abil­ity to the core in­come. The com­pany's ex­pe­ri­enced man­age­ment and re­qui- site sys­tems are well placed to tap the growth op­por­tu­ni­ties in the mu­tual fund in­dus­try. Well guided TORs and pru­dent in­vest­ment frame­work pro­vide com­fort against the man­age­ment's plan to sup­ple­ment com­pany's in­come through gov­ern­ment se­cu­ri­ties in­vest­ments. Sus­tained im­prove­ment in profitabil­ity lends more than ad­e­quate sup­port to cov­er­age's. The Pak­istan Credit Rat­ing Agency (PACRA) has main­tained the long-term en­tity rat­ing of MCB-Arif Habib Sav­ings & In­vest­ments Lim­ited (MCBAH) at "AA"(Dou­ble A Mi­nus) and short-term rat­ing at "A1+" (A One Plus). These rat­ings de­note very strong ca­pac­ity for timely pay­ment of fi­nan­cial com­mit­ments. The rat­ings re­flect MCBAH's well-main­tained fran­chise aug­ment­ing its rel­a­tive po­si­tion­ing in a com­pet­i­tive mar­ket.

The rat­ing in­cor­po­rates MCBAH's as­so­ci­a­tion with two prom­i­nent busi­ness con­glom­er­ates of Pak­istan - par­tic­u­larly a lead­ing bank, MCB Bank Lim­ited. The rat­ings are de­pen­dent on the com­pany's abil­ity to sus­tain its mar­ket stand­ing by cap­i­tal­iz­ing on the self and group op­er­at­ing plat­form.

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