As per the notice issued at the KSE, MCB Bank (MCB) has obtained a ‘No Objection Certificate’ from the State Bank of Pakistan (SBP) to set up wholly owned Islamic Banking subsidiary. MCB has 28 Islamic Banking branches, including 1 overseas, as per 2012 accounts. Once the license is issued by the SBP, these branches will be merged to form an Islamic Banking entity. The paid up of the subsidiary will be Rs10bn as per the SBP regulations.
As per 2012 accounts, total asset size of MCB’s Islamic Banking business stands at Rs14.8bn with Investments and Islamic financing making up Rs2bn and Rs10.2bn respectively.
On the other hand, deposits stand at Rs7.9bn. As far as the profitability is concerned MCB’s earnings from the Islamic business declined by 75%YoY in 2012 to Rs44mn. Profitability declined on account of spreads compression. However, improving other income (up 130%YoY to Rs264mn) somewhat supported the bottom line in 2012.