MCB: Conservative lending strategy and weak profits justify ‘HOLD’ stance - By Insight Research

<p></p><ul><li><span style="font-size:medium;">MCB bank limited stock performance has remained sluggish over the past 6 months, posting return of 25% compared to 32% and 18% for HBL and UBL. We link this to depressed financial results along with bleak profits outlook, where our thesis is based on i) conservative loan growth strategy (especially to power sector), ii) pressure on NIMs owing to full year impact of 2016 PIBs maturity and iii) another maturity of ~PKR40b (20% of total PIBs) in 2H2017.</span></li></ul><ul><li><span style="font-size:medium;">The advances growth is likely to remain the range of 8-10%. However, asset quality is expected to remain healthy with the provision reversals to continue for next 1-2 years due to efforts of the bank towards loan recoveries.</span></li></ul><ul><li><span style="font-size:medium;">Fo...