MCB Bank Limited (MCB): Defensive play with steady gains - By Insight Research
Mar 17 2025
Insight Securities
- MCB boasts one of the highest current account mixes in the banking sector. MCB presents a compelling investment case due to its attractive dividend yield and stable strategic approach. The bank has been focusing on building a low-cost deposit base and with interest rates dropping sharply in the last few quarters resulting in narrowing NIMs and the removal of ADR-based taxation, the bank is now more focused on increasing zero-cost deposits in its mix.
- We maintain our BUY stance on MCB, with a DDM & P/BV based target price of PKR345/sh for Dec’25. The stock is currently trading at a P/E & P/B of 6.9x & 1.3x on CY25 estimates, with a DY of ~13%
- Key risk to our investment thesis are i) Lower than estimated growth in current accounts, ii) Deterioration in asset quality, iii) Higher than estimated operating expenses and iv) Abrupt changes in regulatory framework.
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