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Pakistan MCB net profit surges 30pc

KARACHI — Pakistan's Muslim Commercial Bank (MCB) yesterday reported a 30 per cent rise in net profit during the first nine months of the year, citing higher gains from investments in companies and increasing lending spreads.

Pakistan's central bank has followed a tight monetary policy in recent years, pushing interest rates higher to counter inflation.

MCB's banking spreads, the spread between lending and deposit rates, are the highest in the banking sector and average 7.5 per cent compared to the industry average of 7.3 per cent.

MCB, in a statement to the Karachi Stock Exchange (KSE), reported a net profit of 11.25 billion rupees ($185.31 million) for the January-September period, up from Rs8.64 billion from the year-ago period.

The result was slightly below market expectations.

Five analysts surveyed by Reuters forecast profit in a range of Rs11.2 billion-11.9 billion.

"MCB's banking spreads are usually the highest in the sector," said Muhammad Imran Khan, head of research at First Capital Equities.

"MCB has also increased its profit due to a strong consumer financing product which increases its fee, commission and brokerage income," said Khan. Fee, commission and brokerage income increased 29.5 per cent to Rs4.74 billion from Rs3.66 billion in the year-ago period, according to its profit and loss account. MCB also announced a dividend of Rs2.5 per share for the third quarter, bringing the total to Rs7.5 per share for the first nine months of 2007. In October 2006, MCB raised $150 million by issuing global depositary receipts in London and Standard & Poor's announced this week the launch of the S&P Select Frontier Index, in which MCB will be among the top three constituents.