MCB Bank Limited (MCB) Q2 FY2025 Earnings Call Transcript & Summary

Right. Good afternoon, good evening, good morning, ladies and gentlemen, wherever you are. Welcome to the Second Quarter 2025 Results Call for MCB Bank Limited. Once again, we are pleased to have with us Mr. Hammad Khalid, the Chief Financial Officer of the MCB joining us on this call. The format will be a management presentation followed by a Q&A session. [Operator Instructions] With that, Hammad, sir, over to you.

Thank you, Yusra. Good day, everyone, and thank you for joining in the results release call of MCB Bank Limited. So as for routine, I'll just quickly take you through the key financial highlights for the half year ended June 30. So starting off with a glance at the operation and financial landscape of MCB. So as of June 30, we are operating 1,395 branches and that one of [indiscernible] of the country, tailoring our products and services to meet the evergrowing financial requirements of [indiscernible] customers. From an expansion standpoint, we are actively looking at areas where there are good business potential, while on the other hand, consolidating in areas where the potential has proven to be weak over a period of time. If I plug in the 300 branches operated by our wholly owned subsidiary, we operate one of the largest 80-branch network in the country. As far as our international footprint is concerned, we are present in Sri Lanka, operating 5 retail branches; 2 branches in UAE, wholesale banking licenses there, 1 in Dubai and 1 in Sharjah; 1 license in Bahrain. And we have recently opened a Rep office in U.K. just to facilitate our trade and remittance business as this particular corridor continues to register itself post the Middle East and U.S. markets. We are proudly serving a customer base of 9.3 million through our brick and mortar and digital channels, and delivery channels. We are one of the leading ATM acquirers in case of [ adverse ] Cash dispensation. As far as digital penetration is concerned, I'm happy to share that we have crossed 1.6 million customers within the span of 4 years of our relaunch of digital platform, which is almost 10x of the legacy platform. From a market share perspective, we hold 5.63% of the domestic deposits, slight dilution from what we had as of year-end 2024. On the Advances front, 4.86%, remittance 11.26% market share. This remains a mainstream business line for MCB. Now moving on to the key highlights. On the global front, I believe that the first half of calendar year 2025 has been marked by heightened uncertainty, primarily driven by the volatile trade policies and geopolitical tensions and the markets actually reacted to each and every event. From Pakistan's perspective, there have been considerable signs of improvement, stabilization. The ongoing IMF program has proved that the reforms agenda that was signed up with the global lender is paving the way forward for the country. Real GDP growth at 2.68% for the last fiscal year. On the inflation front, we have seen the pressures receding significantly with inflation for the month of June turning down to 3.2%, down from 3.5%. We understand that for the month of July, there was an uptick, but we expect the inflation to remain in control levels as we said. On the external account front, the position improved significantly, reversing from a deficit posted for the last fiscal year of $2.072 billion to a surplus of $2.1 billion. Future outlook, we are cautiously optimistic from building on the economic traction that we have gained in the first 6 months of this calendar year. However, downside risks still remain. We have to continue working on the agenda that we have signed up with the global lenders, plus the precarious of the delicate position on the external account front, as we have seen an uptick in the import numbers for the last month, where import numbers are USD 5.5 billion for the month of July 2025. Now moving to MCB. One of the key highlights for MCB for the first 6 months has been a staggering increase in the current account base to the tune of PKR 256 billion, which brings us closer to our target concentration level of 55%. This is what we have been guiding market in the past. Bank investment has increased to PKR 2.1 trillion, which is an uptick of 78% YTD. Since we are offering saving deposits at rack rates, our cost of deposits have reduced significantly to 5.23%, which also corresponds to the significant decrease in the monetary policy rates. Stand-alone PBT of PKR 58 billion, consolidated PBT of PKR 62 billion, whereas we continue to extract recoveries from the chronic NPL base transfer from NIB with PKR 197 million recovered in the first 6 months. Another key highlight has been a notable increase of 16.7% in our home remittance business, reaching $2.3 billion during the first half of 2025. Moving to the financial numbers, starting off with the financial position first. So asset base of PKR 3.378 trillion, reflecting a growth of PKR 675 billion over year-end 2024. So with the ADR pressures receding and limited quality credit opportunities out there, you would observe that the asset mix has changed with gross advances going down by PKR 390 billion with a corresponding increase of PKR 905 billion in the investment base, which was primarily funded by the increase in deposits, the reduction in advances and the [ OMO ] borrowings to gain from the arbitrage available. Investment, primarily PKR 452 billion added to floating rate PIBs, PKR 62 billion addition in the fixed rate PIBs, whereas treasury bills PKR 376 billion were added to the base. The yield on the total investment total sums to around 12.86% for the first 6 months of 2025. In terms of deposits, the total addition in deposit base was PKR 313 billion, out of which PKR 256 billion was in current accounts. So approximately 82% of the total increase that we registered in the year came in from the current account side for which there is no interest rate consequence. Savings deposits were up by PKR 54 billion, summing up to a base of PKR 979 billion. So pertinent to highlight that we touched an ever higher base of PKR 1.2 trillion in terms of our current account base with the total deposits touching PKR 2.2 trillion. Borrowings, as I shared earlier, to gain from the arbitrage, which is available out there in the market by investing in floating rate PIBs, we have increased our base from PKR 268 billion as of December '24 to PKR 658 billion, which sums up to an addition of PKR 390-odd billion approximately. On the deposit side, the heavy lifting was done by the retail franchise, followed by some decent additions coming in from our overseas segment. Equity base of the bank at PKR 234 billion, reflecting 3% up when mapped against December '24 numbers. Now moving on to our advances base. The major decrease was in the corporate segment, PKR 393 billion to be exact, where the corporate segment came back to its normalized concentration level of around 73%. Another key highlight has been an uptick in our consumer financing number, which is up by PKR 6.4 billion to PKR 43.6 billion, translating into 17% increase. This is what we have been guiding the market that the interest rate cycle easing. What we anticipated was an increase in the consumer banking book, primarily in the auto financing segment, and we have seen some decent traction in the first 2 quarters of 2025. However, in terms of market share, we hold 4.86% of the total domestic advances. On the NPL front, based on the standard performance of our recovery units, we were able to decrease our NPL base by PKR 1.2 billion approximately. This covers the classification that was done in the first 2 quarters, objective and subjective both, some retail exposures classified amounting to approximately PKR 1 billion in the second quarter of 2025. However, based on the discussions held with the business and the recovery units, there are very good prospects of recoveries coming up in the following quarters with reference to these particular advance. In terms of recovery from NIB-related stock, you would see that we have recovered PKR 197 million in the first 6 months, slightly diluting from what we have been posting in the past as we expect saturation from these chronic NPLs. So total recovery from NIB for the 6-year period sums to around PKR 10.78 billion out of PKR 29.6 billion. So approximately 36% of that base stands recovered as we speak today. On the investment front, total treasury bills of approximately -- sorry, -- so total treasury bill base of PKR 452 billion, which reflects an increase of PKR 376 billion, thereby the treasurable concentration improved 22%. On the fixed rate PIBs, an addition of PKR 62.6 billion in the base, focused PKR 452 billion add to base, taking the total base to PKR 1.140 trillion. In terms of concentration within the PIB segment, approximately 78% is invested in floating rate PIBs, whereas the balance 22% is in fixed rate PIBs. The average duration for fixed rate PIBs is around 2.4 years. With reference to the surplus that you see on this slide, PKR 38 billion approximately versus PKR 15.7 billion posted last year, PKR 22 billion increase. Much of it relates to the increase on the fixed rate PIBs. The total surplus there is around PKR 7 billion. Floaters carry a surplus of around PKR 16 billion. So PKR 24 billion surplus on the existing PIB portfolio, whereas the balancing number relates to the equity securities. Now moving on to the current deposit side. As you will see that you see,-- sorry, can you see the presentation?

Yes, Hammad, your presentation is still visible.

Okay. I can't see the presentation, so I need to -- okay, sorry. So total current account base of PKR 1.2 trillion, total deposit base of PKR 2.2 trillion. So our current account accumulation outpacing the total deposits. So when we say that we are aiming to improve our concentration levels to 55%, one of the easiest strategy would have been to do away with high-cost saving deposits, which in MCB's case is not there; as I shared earlier, that we don't offer any special rate on our local currency saving deposits. The other more challenging aspect was to improve our concentration while we continue to build up our total deposit base. So this is what we have achieved in the first half. It's the highest ever accumulation as far as the current account number is concerned, PKR 256 billion, as I shared earlier. As you see in this slide, the current account concentration stands improved to 54%. Another thing that I would like to share is that generally, there is a perception that, and a historic trend as well, that we see the deposit base maybe stabilizing or decreasing in the third quarter of the calendar year. However, we are actively working to challenge this historic trend. And hopefully, by the end of this quarter, we will see some positive results. There is some decent traction as we speak today on the current account mobilization. Now moving on to the performance numbers. Gross markup income, PKR 144 billion, a decrease of PKR 40.6 billion, went up against corresponding period of last year, pretty much reflecting the impact of monetary easing. So if I walk you through the spread analysis on the earning asset side, PKR 757 billion is the average gross advances base with an average yield of 11.12%, which reflects an increase in average volumes to the tune of PKR 174 billion. However, the yield has gone down by 735 basis points, which primarily results into a gross markup income reduction of PKR 11.7 billion, primarily on account of price variance. On the investment front, an average base of PKR 1.5 trillion, which reflects an increase of around PKR 257 billion over last year. However, the yield is down by 657 basis points. So the gross markup income on investments was down by 25%. Now moving to the liability side, deposit base, an average volume of PKR 2.045 trillion, which reflects an increase of PKR 206 billion, whereas the cost of deposit was down by 520 basis points. Out of this PKR 206 billion increase on average, PKR 164 billion was in the current accounts. And in terms of concentration on average, current accounts are approximately 50.5% as of June 30, 2025, scaling up from 47% that we reported as of June 30, 2024. However, the spread works out at 5.29% which is 138 basis points less than the first half of 2024. Now coming back to the profit and loss accounts. So net markup income as a result of the spread analysis that I just shared is at PKR 71.3 billion. So a slight miss out from what we reported in the first half of 2024. On the noninterest income side, a base of PKR 17.5 billion, a deficit of around PKR 700 million. So prime deficit was in the fee commission brokerage. And within the fee commission, the home remittance line, as we have been sharing earlier that there has been some intensified competition amongst the key players in this particular field. And as a result of which the sharing ratios have been changed dramatically over the course of last few quarters. Other than that, the dividend income was up. As far as the card-related branch income, we have seen some decent improvement in the fee income. Going ahead, the guidance is that we will try to cover this deficit that we see on the fee side in the remaining half of this year. As we have introduced new products, there are new fee lines that have been brought down and there has been some revision on selected products and services that we offer to our extreme customer base. On the expense side, PKR 35.1 billion versus PKR 30 billion uptick of 16.5%. Operating expenses increase of 17.9%. Prime reason for the increase is the human cycle adjustment, merit adjustment that we have done for this year, it appears the cycle coming into play. Apart from that, we are actively investing in new branch infrastructure, operational growth, information technology and digitization mandates. This takes our profit before credit loss allowance to PKR 53.7 billion. As I shared earlier, on account of significant recoveries that have been posted by our asset rehabilitation drop, along with the reduction in our gross advances, which resulted in a provision -- of general provision, the total reversal is PKR 4.7 billion as opposed to a charge of PKR 1 billion reported for the first half of 2024. This takes our profit before tax to PKR 58.1 billion, reflecting a drop of 7.4% versus corresponding period last year. So the forum would recollect that the tax rate for the banking companies were revised in the last quarter of 2024, where the effective tax rate for the banking company works out at 53%, whereas in the corresponding period last year, as we see on the slide, was around 49%. Resultantly, the profit after tax number has dropped by a greater margin 14.5% to PKR 27.3 billion for the first half of 2025. Snapshot of the capital ratios, Tier 1 at 15.3%, total capital adequacy of 19.61% and a good enough buffer of approximately 800 basis points on top of the regulatory requirement as of today. Leverage ratio of 5.77%, liquidity coverage of 260% and NSFR, Net Stable Funding Ratio of 155%. A snapshot of our wholly owned subsidiary, MCB Islamics. So the impact of the MDR revision that came into play from the 1st of January 2025 was pretty much reflected on the performance numbers for the entity, where you would observe the profit going down from PKR 4.25 billion reported for first half of 2024 to PKR 2.33 billion. However, there has been some decent traction, as you observe on the chart presented on the top right that the deposit numbers have grown by approximately 20% from PKR 209 billion to PKR 255 billion in the first 6 months, and we expect to continue with the same momentum in the remainder part of the year. The operational network is growing continuously from 224 branches back in '23 to now 304 branches. The aim is to set it up as a midsized Islamic bank as we find greater opportunities out there in Islamic -- scaling up the Islamic proposition. So this sums up the presentation from my side. Over to you, Yusra, for the Q&A.

Thank you, Hammad, sir, for that comprehensive presentation [Operator Instructions] So with that, we do have a couple of -- we have raised hand from Mr. [ Syed Fawad Baseer ] .

All right. So I just have questions relating 2 aspects of the bank. The first aspect is some of the peer banks that we've seen have essentially completely revamped their retail franchises and that has resulted in a lot of deposit growth and double-digit deposit growth. And the deposit mix is also optimized and the ratios are getting better. In order to sort of catch up and -- because some of the -- some banks have now surpassed the deposit base of MCB now. So what's the plan on that, number one? And if you answer that, then I can move on to my second question.

Thank you for the question, Fawad. So as I shared earlier, Fawad, the strategy for us remains no-cost deposit mobilization and low-cost deposit mobilization. On a strategic note, we are not out there to buy out our market share. It's fairly easy to actually offer high or special rates on the saving portfolio and then you can actually increase your share significantly. One thing which I want to highlight is that the 6 months growth on the domestic deposit side was north of PKR 5 trillion for the industry. However, as we speak, within a span of 1 month, it went down to around PKR 3 trillion. So approximately PKR 1.9 trillion was taken away from industry deposits. So we are actually not into this particular field. We are actively working on building our averages as I shared it in the presentation. Having said that, we have seen the numbers posted by our peer groups and we are fairly comfortable with the way we have performed in the first 6 months. So just for reference, last year around if you -- correct, the total current account fees was around PKR 72 billion for MCB Bank in the full year. And for the first 6 months, as we speak, we have added PKR 256 billion. So the target market for us is a loyal customer, which sticks with the institution and reflects in averages. So going forward, we will continue to work in a similar fashion. We understand the market is very competitive, and you will see some decent growth numbers. As I shared in the presentation, current account growth is around 27%, whereas the total deposits have gone up by only 16% from December 2024. So we will be working in a similar kind of a trajectory. And hopefully, you will see some better performance numbers coming from MCB in the quarters that follow.

All right. And sir, second question is relating to the investment book, right. Obviously, it is fairly evident that the increase in borrowings is now being deployed, and there's a certain spread available on it. But the secondary market spreads that we see, the spread is available on a slightly longer term tenures. So is that a tradable market? And is that something that the bank is going to look at maybe for a longer perspective? Or is it just a short-term trade that we're looking at?

So, Fawad, as we speak, the spread of the arbitrage gain is currently available on floaters. So even if you map a 5-year or 10-year fixed rates PIBs, the spread is not there as the borrowing cost approximates around 11.1% to 11.5%. So the only spread which we refer here is the floating rate segment. And you would have observed in the presentation that the biggest increase or the highest increase in the investment portfolio was coming in the floating rate segment. So we do carry some kind of a repricing risk. We understand that the floaters at max get repriced within a span of 6 months. So just in case there is any adverse movement on the interest rate side, by adverse movement I am referring, if we see the interest rate going up, there would be some kind of a negativity reflected on the floater side. However, we don't see any chances of it happening in the near term. And by that, I'm referring to a period of approximately 18 months or so. So by that standard, I believe it's almost certain that we will continue to operate in a similar fashion. So you would see some decent contribution coming in from this borrowing. However, depending upon the risk appetite that we have defined for ourselves, I don't see the numbers to grow abnormally on the owner side.

We have a couple of questions on the chat box, starting from Mr. [ Wasim ] from National Bank Funds. His first question is, can you please share the yield of the fixed rate portfolio along with its weighted average maturity?

Well, approximately 12.82% is the yield being generated on the fixed rate portfolio and average maturity is around 2.48 years.

Got it. 2.48 years. Second question is commission income on remittances turned from positive PKR 820 million in first half '24 to negative PKR 1.2 billion in first half '25. Could you please explain the drivers behind the shift and the outlook going forward?

Yes, I covered that in the presentation. This is one particular revenue where the competition has intensified over the course of last few quarters. So how it works is that there is a rebate that we get from the Central Bank for drawing in the remittances through our channels. However, the competition -- as a result of the competition, the rebate sharing ratios have changed dramatically over the course of last 2 quarters. Previously, on average, I would say that for every [ 20 rials ] that we got on $100 transactions, that is what I am referring to the first half of 2025, there was a sharing ratio of around [ 16 rials ] which was passed on to the tie-ups and balance of [ 4 rials ] was reflected as income by the banks. However, as I said earlier, to draw more remittances towards such channel, which subsequently is used by the customers with foreign currency requirements, the mix has changed dramatically. So we are actually giving more than what we are receiving from the Central Bank. I do expect this attrition to normalize in the times to come and to coop up for the deficit that we observed on the precommission side, we are actively working on introducing new products. We have repriced 3 of our existing products. And we are hopeful that by the end of this year, we would be able to cover the PKR 700 million deficit that we see on the fee side in the half yearly results.

Got it. So the next question is, if foreign currency deposits and current accounts increased significantly in June compared to March this year and largely deposits outside Pakistan, what is your outlook for deposit growth in the coming quarters?

Well, as I shared earlier, we'll continue to build up traction on the current account side. We have posted an increase of 27%, 16.5% in total deposit base. The target that we have set for ourselves is close to around 22% growth in total deposits. However, the growth on the current account side would [Foreign Language] outpace the growth in total deposits. So as we have guided the market earlier, we are aiming for a 55% concentration level. We are almost there. 54% is what we have reported as of June 30, 2025. Average concentration of current accounts is about 50% as we speak. So I believe very selective few banks would be achieving this particular feat. And we will actually strive to take our average concentration levels to around 55%. And a lot of things have actually contributed in driving the current account growth that we have seen in the first 6 months. First and foremost, it has been the service quality levels. We have been focusing on our retail services franchise to ensure that we serve our customers with pride and make sure that we become the bank of choice for our customers. Secondly, we have been actively engaging with our customers tailoring our products and services to match the financial requirements. There have been some deepening done on the existing relationship. Government account activation is one of the key bank. And last but not the least is the pegging of fee staff emoluments with performance numbers. So if a person or a branch is able to bring in a certain amount of current accounts, he is entitled to an incentive, which obviously is pegged with performance.

Got it. And I think the final question from Wasim is, can we expect a decline in NII going forward? And do you foresee improvements in the coming quarters?

As far as the NIMs are concerned, I don't see any challenge. I believe we would be able to cover up the deficit that we have seen on account of 10-plus rate implications by focusing on the current account. So as far as noninterest income is concerned, as I shared earlier, there are certain things in play. And the major deficit is actually coming in from the fee side and that too from one particular line, home remittances. So as I shared earlier, certain strategies are already in play, and we will see that we will try and cover this gap. We don't expect it to fall further from what we have reported in the observations.

We have a question from [ Murtaza Hassan ] in the chatbox. So you've covered deposit growth. He's asking for your guidance on branch growth, cost-to-income and ADR target for '25.

Thank you for the question. So as far as the expansion is concerned, I showed in the presentation that we are actively looking for areas where we will find good business prospects. While on the other hand, we are consolidating areas where they have been series of process, say for a period of 3 years or so. And based on our assessment, it is not a viable location for us to operate a branch. So it's a dynamic situation. The earlier guidance that we gave to the market was that we are not aiming to add further branches as it goes against the digital penetration side. However, based on the current dynamics, there was a question raised by -- that we have seen a few banks outperforming on the deposit side. So it has much to do with the brick-and-mortar expansion as well. So the strategy is in the works. I believe we will be adding some new branches by the year-end by very carefully assessing the business case and then selecting those areas. With reference to cost-to-income ratio, I believe MCB is known for the low cost-to-income ratio. And for us, we would like it to retain somewhere below 40% for this year and in the years to follow.

Got it. Sir, he's asking your target for the current accounts. I think you also mentioned that, but if you could repeat that on the average yield and duration of fixed and floating rate PIBs. I think you've already mentioned, but if you could repeat that.

On the current account side, we have crossed PKR 1.2 trillion as of June 30, 2025. There was a decent increase of PKR 256 billion in the first 6 months of 2025. So going forward, I believe there would be a constant addition coming in from the current account side, primarily in the retail domestic franchise. We have added 27% to our base in the 6 months. We are aiming to improve it to 35% by the end of this year. [Foreign Language], if things work the way they have in the first half, you would see maybe a greater percentage being achieved. And much of it will be put to test in the third quarter. As I shared earlier that the historic trends reflect that deposits and current accounts generally take a dip in the third quarter. And we are actively engaged with our retail franchise to challenge their strength, and there are some decent results that we have seen in the second half so far.

Okay. Sir, he has asked also that, has the floating rate PIBs been reset in 2Q CY '25.

You see with the maximum repricing duration of 6 months, majority of it has already been repriced, but there would be a select base which would be repriced in the second half. But we don't expect the NIMs to face contraction on account of the repricing element. Just to answer, I believe 85% to 90% is already factored in.

Got it. This next question is on remittance-related fee. I think you've given quite a comprehensive response on that. Second, is the arbitrage still available?

The arbitrage is available on a floater rate bond, which steadies the spread for the duration. This was a question asked by Fawad Baseer as well. So not on the fixed rate PIB duration. So on the floaters, yes, there is some arbitrage ranging between 40 to 70 basis points.

Got it. And he's asking, can we expect similar leverage positions as 2Q CY '25, 29% for the remaining calendar year?

Well, as of now, as I said earlier, it's a dynamic situation. Obviously, this is under discussion in almost at every management level. So we would be taking a position depending upon how we forecast the interest rates to move in the times to come. However, our take is that the interest -- the cycle has already bottomed out. might be a room of around 50 basis points reduction, but we expect a period of pause for now. So I believe to answer your question, a similar level, yes, very much maintainable.

Got it. We have a couple of questions from [ Waleed Rathore ] , but they've all been answered on the PIBs and the repricing of the investment portfolio. Again, another question on the same from [ Fiza from Atlas ] the fixed portfolio and investments and the duration and yield, okay?

Okay. So on the fixed rate side, I'll just share response again for the consumption of the public. So fixed rate return approximately 12.8%. Duration is close to 2.4 years [indiscernible] . And in terms of concentration within the PIB segment, it's around 22% fixed rate PIBs and the balance 78% is floaters.

Got it. We have a question from [ Mr. Nadeem Elahi ] He's asked why has MCB increased investments by 77% when the last leg of the downward interest rate cycle is coming through?

Well, as I shared earlier, we believe there is some arbitrage to the -- and we have invested into that particular domain. And we expect the strategy that we have undertaken to supplement our net interest margins in the quarters that follow. It has, to an extent, added to the NIM in the second quarter of 2025. So you see it depends on the call of a particular bank. If we see another 50 basis points cut, obviously, this transaction will start making sense right away. So that's a call that the bank has to take and we are of the considered view that currently, it's making around 40 to 70 basis points for us depending on the particular deal, depending on where we have invested in terms of floaters. So we will continue to carefully analyze and dynamically review this particular situation. As and when we feel that we don't -- or it's carrying a negative kind of a carry, we can always work out the solution. We have treasury books actually pay off the repo requirement. So as I said, it's a dynamic situation. It's pretty much asset liability [indiscernible] mandate.

Got it. Sir, we have a question on interest rates from [ Adar Mukhi ] He's asking your view on interest rate levels and what could be the estimated spread of PIB floater, MCB health -- MCB held.

Well, on the interest rate side, we are at the consider view that the cycle has already bottomed out. We expect a period of pause for now. There is room for another 50, maximum of 100 basis points shot but not in the near future. We might see that happening maybe at the tail end of this calendar year. So as far as the spread on the floating rate PIB is concerned, it's stacked with the duration, approximately 70 basis points on top of the reapportionment date on the 6 monthly auction of the treasury bills.

Got it. And we have a follow-up question from Mr. [ Naveed Elahi ] He's asked, is MCB active more than before in the Middle East? When is Islamic Bank IPO, as the market is the best it has ever been?

Well, to answer your first question, yes, we are active in UAE. As I shared earlier, that we have opened one more branch in Sharjah very recently. This was from last October 2024. There is some decent amount of money that we have made from our UAE single branch. It was, if I recollect around $22 million is what we made last year from one particular branch in UAE. And hopefully, in the times to come, we would see us expanding just capitalizing on the potential that is there in that particular market. And Yusra, what was the second question, please?

He's asked about the Islamic Bank IPO.

Well, we have been saying this for a while. It's again under consideration. It's a long kind of a process. I believe to go out there to the market, the financial stability and the operational performance of the franchise matter a lot. So as I shared in the presentation, the impact of NBI reflects on MCB Islamic performance numbers for the first 6 months. There is a strategy in play. We are actively working to ensure that we are able to surpass the numbers that we have posted in the last 2 years from the Islamic franchise. So as I said earlier, this is an active discussion. And hopefully, you will see the results coming pretty soon.

Since there are no more questions on the chat box, I thought I'd ask a couple of my own. With regards to the asset quality, I see that you have a strong stock of NPL-related recovery still coming through. So if you could touch upon what your outlook is now for asset quality.

Well, so I believe that we don't expect a charge to reflect in our profit and loss account in the quarters that follow based on the strong recovery pipeline that we have in place. In the past, the support has been coming in from the recoveries mostly from ex-NIB portfolio. That, to an extent, has actually dried up a bit PKR 197 million, but still we are extracting juice out of this [indiscernible] NPL base. So apart from that, the NPLs for MCB, few newly classified exposures, as I shared earlier from the retail segment, there are good recovery prospects. And at least in the select few quarters that follow, we don't expect a provision charge. There would be a reversal [Foreign Language] post that. And we don't expect any significant accretion on the NPL side as well.

Well, a follow-up question to that would be interest rates having bottomed out, what is now the outlook for private sector credit? And what would take for it to really move the needle for loan growth now?

Well, I believe we have seen a period of stability. And with the things shaping up the way they are, we would see the private sector credit demand picking up. But again, for this to pick up, it has -- the quality on an overall industry-wide basis has to remain intact. So as we have been sharing earlier that there is a very limited pool of good quality assets out there for every other bank to capitalize on. And that is why we don't see much of an increase on the private sector demand. So with the economic activity picking up, we have seen a rise in the import number for the month of July. We expect that there would be some increase in the private sector credit demand in the quarters that follow. And much of it obviously would be taken up by the top 3 or 4 tier banks.

Got it. Thank you so much. At this moment, Hammad, we don't seem to have any more questions. If you like, we can move towards the closing part of the call. If you have any closing remarks to make, please?

Yes, sure. So the guidance to the market would be that there is a very clear strategy worked out for us, and we are actively working to deliver on those numbers. We are actively working on the digital side as well. So this -- by the investment that we are currently making on the digital front and the technology front is going to aid our retail business in the quarters that follow. So what I can share with the forum is that the performance number [Foreign Language] in the quarters that follow would remain upbeat and there would be an upward trend observed in the remaining part of this year and the following years [Foreign Language].

Thank you so much. With that, ladies and gentlemen, we can bring today's investor call to a close. Thank you so much for joining us, and we hope you will be here with us next time. Thank you so much, Hammad, sir, for taking the time.

Thank you. Thank you, everyone.