KARACHI, Oct 24: Both the Habib Bank and the MCB Bank showed strong growth in the first nine months of the calendar year, but their profit growths were slightly higher than the corresponding period of last year.

In backdrop of meltdown of the financing system in the developed world, the results of the two banks are encouraging for the market and overall economy.

MCB Bank’s profit-after-tax in nine months reached Rs11.623 billion compared to Rs11.247 billion in the same period of last year, an increase of three per cent.

The HBL showed profit-after-tax as Rs9.616 billion compared to Rs9.213 billion of nine months of last year, an increase of four per cent.

The results showed that the last three months of the Pakistani banks were irrelevant to the turmoil in the global banking system, which led to sinking of huge investment banks, like Lehman Brothers.

The net interest income of the two banks rose sharply, mainly due to higher lending rates as a result of State Bank’s higher interest rate policy which was the increase of the benchmark discount rate to 13 per cent in July this year.

Net interest income of the MCB Bank rose by 13 per cent to Rs20.320 billion while that of Habib Bank was up by 17 per cent to Rs25.965 billion.

Non-interest income of the HBL also rose by 23 per cent to Rs7.295 billion. However, non-interest income of the MCB Bank showed a negative growth of 11 per cent to Rs4.501 billion during the period.

Both the banks showed a significant increase in the operating expenditure.

During the nine months, the MCB’s operating expenses increased by 25 per cent while the increase in HBL was 22 per cent.

“Although net interest income and non-interest income of the HBL during the period increased, higher provisioning and write-offs diluted their impact on the bottom-line,” said Farhan Rizvi, a researcher at the JS Research, a brokerage house.

Total provisioning and write-offs during nine months went up by 175 per cent to Rs2.9 billion as compared to Rs1.1 billion recorded in the same period last year.

The HBL did not announce any payout with the results.

The MCB’s provisions and write-offs surged by 40 per cent as they were recorded at Rs2.2 billion versus Rs1.6 billion previously.

“The MCB bank announced a cash dividend of Rs3 per share with these results taking the cumulative dividend for 2008 to Rs9 per share,” said Mr Rizvi.

A release issued by the MCB Bank said the bank’s deposits increased by Rs32 billion over December 2007 to reach Rs324 billion. Gross loans and advances also increased significantly by 13.5 per cent over December 07 and reached Rs261 billion.