MCB Bank Limited (MCB) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Welcome to MCB Bank Limited's 2025 Corporate Briefing Session and 3Q Results Call. Once again, we are pleased to have with us Mr. Hammad Khalid, the Chief Financial Officer of MCB joining us on this call. The format of the call will be a management presentation, followed by a Q&A session. The usual housekeeping rules before we begin. [Operator Instructions] With that, sir, over to you.

So thank you, Yusra, and good day, everyone. I'll just quickly walk you through the operation and financial landscape of MCB Bank Limited. So we are primarily a domestically domicile bank, operating 1,396 branches in the urban and rural spaces of Pakistan, providing transaction and financial convenience to a large customer base of over 9.4 million customers. With reference to our branch expansion strategy, we are eyeing to open another 42 to 45 branches in the upcoming year. The strategy here remains that we will eye areas where there are strong business prospects, while on the other hand, consolidate areas where the business prospects have proven to be weak over a period of time. By plugging in the 305 branch networks of our wholly owned subsidiary, MCB Islamic, we operate one of the largest brick-and-mortar network in the country. From international presence, we have 5 retail licenses or branches operating in Sri Lanka, 2 wholesale branches operating in UAE, 1 in Dubai and 1 in Sharjah, and 1 offshore unit in Bahrain. We have very recently opened a rep office, representative office in U.K. to channel home remittance business to Pakistan as this particular market continues to register itself as one of the major remittance corridors,, both Middle East and U.S. In terms of our customer base, we are proudly serving 9.4 million customers through our brick-and-mortar and digital channels. Our ATM fleet being registered as one of the highest cash dispensation on office transactions as notified by 1LINK. In terms of our digital penetration, I'm pleased to share that we have approximately 1.7 million registered users, out of which approximately more than 50% are financially active. And by that, I'm referring to people conducting or customers conducting transactions in the last 30 days, financial transaction. In terms of market share, we hold 5.6% share of domestic deposits as of September 30. On the advances side, our shares dropped to 4.72%. We remain a key player on the home remittance side with a share of 11.46%. Now moving on to the next slide, key macroeconomic outlook. So from a global perspective, the first 9 months were marked by uncertainty, primarily on account of the escalation of tariff and trade barriers to which the markets have reacted strongly during the course of this particular year. From Pakistan's perspective, it has been a considerable improvement on the economic front with strong buildup of the external and fiscal buffers. Inflationary pressures did recede down to 2.3% or approximately 3% in August, have scaled up very recently to 5.6% for the month of September and 6.2% for the month of October, citing the issues on the food inflation and the trailing effects of the floodings that the country experienced. Current account deficit has widened in the third quarter, imports outpacing the export number. It sums up to $594 million, up from $502 million reported for the same period last year. From a future outlook perspective, we remain cautiously optimistic. Policy consistency agreement on the reform agenda that we have signed, it's already there, but we need to deliver on all the fronts with the global lender. Prime concern as of now has been the law and order situation and nonescalation that remains a pre-rack of the tensions that we have with our neighboring countries. So from MCB's perspective, the key highlight for the 9 months period has been the staggering increase in the current account base with approximately $272 billion added in the 9 months period. The heavy lifting on this front was done by the retail franchise that took almost 80% of the increase that we see here in numbers. On account of our strategy to focus on low-cost or no-cost deposit mobilization, our domestic cost of funds reduced from 10.47% in the same period last year to 5.01% for the 9 months period 2025. And obviously, it correlates with the significant decrease in -- on the interest rate side. Stand-alone PBT of PKR 87.5 billion with consolidated PBT of approximately PKR 95 billion reflects a drop of 8.7%. In terms of NIB, we have recovered close to PKR 523 million in the 9 months period, which takes our total recovery to over PKR 11 billion in the span of approximately 8 years now. Remittance business, as I shared earlier, remains a key business area for us. Not only it helps us on the fee side, but primarily the FX liquidity, which we can use to build more stronger relationships with the corporate portfolios. On the statement of financial position side, the asset base of MCB was reported at PKR 3.2 trillion, reflects a growth of PKR 529 billion when mapped against 2024 numbers. On the asset mix side, you would observe that the gross advances reflect a drop of PKR 414 billion, primarily on account of the ADR-based precious receding as of December 31, 2024. Corresponding increase is observed on the investment base, up by PKR 843 billion. Much of it coming in, in the floating rate segment, PKR 520 billion added in the floating rate PIB portfolio taking the base to PKR 1.2 trillion, PKR 218 billion addition in the fixed rate PIBs, whereas PKR 72 billion were added in the treasury bill portfolio. The yield on investment is at around 12.57% in the 9 months period as opposed to 19.35% in the corresponding period last year. In terms of our fixed rate, PIB maturity, the weighted average yield to maturity is 2.9 years. On the liability side, we reported a deposit base of PKR 2.231 trillion, a growth of PKR 309 billion in absolute terms, out of which the current account increase was PKR 272 billion, which is approximately 88% of the total increase in the deposit base, bringing us near to what we guided to the market in terms of concentration levels. So I'm pleased to report that we have achieved a 55% concentration level that we were eyeing for the shorter term. On the saving account side, we have added PKR 35 billion, PKR 960 billion based as of September. So our total CASA base of over 97% as of September 30. Equity base of PKR 239 billion, an increase of PKR 12 billion mapped against year-end 2024. Moving on to the advances side. Advances base of PKR 680 billion. Much of it concentrated in the corporate segment to the tune of approximately PKR 500 billion, which is almost 73%, 74% concentration held. One key area where we have seen improvement is the consumer segment, which is directly linked with the improvement in the macroeconomic environment, particularly the decrease in interest rate. And the segment where we are registering this particular improvement is the auto financing side. So our consumer banking -- our consumer lending portfolio is up by PKR 9.4 billion to PKR 46.6 billion. On the NPL side, based on the strong recovery produced by our recovery teams, we were able to reduce our NPL base from PKR 53.5 billion to PKR 50 billion, a reduction of PKR 3.5 billion, much of it coming in the loss categorized loans, which went down by PKR 2.1 billion, followed by a reduction of PKR 1.4 billion in the doubtful category. So the guidance to the market on the NPL side is that based on the credit due diligence that we have conducted, we don't expect any significant accretion in our NPL base going forward. There would be some classifications, which are a normalized kind of a level that we have seen in the past. In terms of gross advances, if we take last 6-year period, the CAGR works out at 4.11%. Advances yield have dropped from 18.15% for September '24 to 10.88%, primarily reflective of the significant impact of monetary easing cycle reflected on the yields. As far as recovery from NIB is concerned, we have recovered PKR 523 million for the year-to-date, taking our total recovery from ex NIB portfolio of PKR 29.6 billion to PKR 11.11 billion, which is approximately 36% recovery within a span of 8 years. Investment side, treasury bills, a base of PKR 148 billion, an increase of PKR 72 billion. PIBs, an increase of PKR 218 billion, taking our base to PKR 469 billion. The significant increase was in the floating rate bonds, which are up by PKR 520 billion to PKR 1.2 trillion. Another major addition would be in the shares in listed and unlisted securities, which is up by PKR 4.75 billion, or 12% growth. So prime areas where we have had exposures is energy, oil and banks. In terms of surplus on revaluation of securities, you would observe an increase of PKR 31 billion, which is 198%. So the surplus on revaluation of securities has scaled up to PKR 46.7 billion, out of which approximately PKR 20 billion relates to the equity portfolio and the balancing is related to the PIB portfolio. In terms of concentration levels, treasury bills constitute 8%. PIBs, fixed and floating added constitute 85% of the total investment base. And in terms of concentration within the PIB segment, floaters are 72%, whereas 28% is the fixed rate bond, PKR 469 billion being the cohort base. So on the deposit side, total deposit base of PKR 2.2 trillion with current account base of PKR 1.2 trillion. So saving account base of PKR 960 billion. So that takes our CASA to over 97.5%. So primary the strategy behind mobilization of current account is that, first and foremost, the improvement in service quality. There are different methods, different parameters being introduced during the course of this year to ensure that we are able to provide service to our customers and able to generate or mobilize more current accounts on that. Apart from that, deepening of the existing relationship, activation of government relationships and capitalization on the remittances flows have been in play to make sure that we achieve the target that we guided the market. So COD domestic is 5.01%. Market share is 5.68%. If you look at the chart at the right, total deposits CAGR of 12.31% over the last 5 years with this current account CAGR is 20.09%, so outperforming the total deposit growth. If you look at the increase year-on-year, this is by far the highest that we have achieved. The latest was back in 2023, where we added PKR 191 million in absolute terms to the base. Whereas for the 9 months, we have added PKR 272 million current account to the base. If you look at the concentration levels, it was 49% current account concentration as of December 31, 2024, and which are scaled up to 55% as of September 30, 2025. Now moving on to the performance numbers, gross markup income of PKR 220 billion reflects a drop of PKR 63 billion. Markup expense, a positive variance of PKR 56 billion translates into a NIM of PKR 109 billion versus PKR 115 billion reported for corresponding period last year. If I can just quickly take you through the spread analysis. In terms of earning assets, gross advances and average base of PKR 717 million at a yield of 10.88% versus PKR 600 billion. So gross advances volume is up by PKR 117 billion. However, there is a drop in the yield of 727 basis points. Resultantly, the gross markup income advances is down by 23%, much of it coming in on account of the price variance to the tune of PKR 39 billion, offset to the extent of approximately PKR 16 billion on account of volume variance. On the investment front, an average volume increase of PKR 333 billion decrease in yield of 678 basis points. So certainly, the gross markup income investments was down by PKR 36 billion. On the liability side, we reported an average base of PKR 2.082 trillion versus PKR 1.8 trillion. So the total deposit base has grown by approximately PKR 200 billion. Approximately PKR 184 billion out of this PKR 200 billion is coming out of the current account side. So on an average, we have improved our current account concentration from 47% reported as of September 30, 2024, to 51% as of September 30, 2025. However, the effect of monetary easing reflects on the spreads of the bank. Thereby, the spread recorded a reduction from 6.58% for corresponding period last year to 5.16% for the current year. Now coming back to the profit and loss accounts. So noninterest income of PKR 26 billion, primarily flattish. Prime areas where this increase was dividend and FX income. However, the fee was where we faced a major dent and one particular revenue, which is the intense competition on the remittances side. So there was a negative. Obviously, we wanted to channel more remittances to our network. And for that, based on the market dynamics, the fee has to be passed on to the tie-ups. In terms of non-markup expense, PKR 52.89 billion, an increase of PKR 6.34 billion on the operating expenses side. This increase of PKR 14.6 billion was primarily driven by investments in talent, technology and marketing. With the cost-to-income ratio for the bank works out at a decent 37.65%. Our short-term cost-to-income target is set at 35% going forward. In terms of credit loss allowance, based on the recoveries posted by our recovery units, plus the reduction in the gross advances base, which resulted in a reversal of ECS charge stage 1. We reported a reversal of PKR 5.45 billion versus a charge of PKR 0.86 billion for corresponding period last year. This takes our profit before tax to PKR 87.48 billion versus PKR 95 billion reported for the period 2024 -- 9-month period 2024. In terms of taxation, there was an amendment made in the tail end of 2024, where the corporate tax rate for the banking companies was revised upward and the ADR taxation was done with. So corresponding period taxation, effective tax rate is 49%. However, for this year, the effective tax rate based on the revisions that I just covered, scales to 53%. So resultantly, our profit after tax for 9 months on a stand-alone basis is PKR 41.1 billion versus PKR 48.5 million, which reflects a reduction of 50.2%. So having said that, this anomaly with reference to the effective tax rate would be adjusted in the fourth quarter results as the entire differential of the change in rate was accounted for in the fourth quarter of 2024. In terms of profitability ratios based on the performance of 9 months, ROE comes to 23.5%. ROA comes to 1.85%. With reference to CAR, no concerns there. Significant buffer on top of the regulatory requirement of 11.5%. So CAR is at 19.88%, which was 19.35% as of December 31, 2024. Leverage ratio well above the regulatory requirement of 3% at 5.72%, liquidity coverage of 2.67% and a stable funding ratio of 163% against the benchmark set up 100%. Now a snapshot of our wholly owned subsidiary, MCB Islamic. So the effect of MDR application from 1st of January reflects in the performance numbers of MCB Islamic as is the case with all the Islamic banking institutions operating in the country. So we do observe a drop in their profit before tax number of 45%. They made PKR 3.6 billion versus PKR 6.6 billion made for corresponding period last year. However, with the sizable scale that we have in terms of branch network, scaled up of 3 or 5 branches as of September 30, 2025, and with all the bells and whistles and by that, I'm referring to all the offerings on the digital front in play, we expect this Islamic contribution to be a bit better in the times to follow. So from next quarter onwards, we expect the current account mobilization, particularly on the Islamic side to be more robust and strengthening our total group-wise current account number. Sums up the presentation on my side, over to you, Yusra, for the Q&A. Thank you.

Thank you so much, Hammad, for that comprehensive presentation. [Operator Instructions] So we do have a couple of questions in the chat box. The first is from Atlas AMC, right, from Talha, he's asking what is your current account percentage target for 2026?

Well, the guidance that we gave to the market was 55% for the short term. We have achieved that target, and we want to build up on this particular side. So the challenge for us is that we want to continue growing our deposit base in totality. Having said that, we have shied away from the high-cost deposit number. So it's pretty easy to buy out your market share. You just offer a special rate out there, and you can just grow your deposits like that. But it is dependent on what you expect in terms of interest rate outlook and then you decide your strategy accordingly. So for us, I believe we will be scaling up our share. We would like to see it reaching 60% in the near future. The strategy, as I shared earlier, is in play. And hopefully, that in the next 2-year period, you would see a scaling 60% concentration level on the current account side, [Foreign Language].

Perfect. And sir, second question is on the weighted average yield on fixed portfolio, the investment book.

On the fixed rate PIB, the weighted average yield of the outstanding stock is close to 12.29%.

Okay. So a couple of questions from Murtaza Hussain from Sona Corp. He's asking, can you give guidance on -- again, he's asked on current account target for '25, '26, but then again, there's also a deposit growth target for next year. And what is the average spread on T-bills on floaters and average maturity of the floating rate portfolio?

Well, with the reference to our total deposit target, we are eying north of 20% for the upcoming year. We are close to 16.3%, 16.8% for the current year as we speak, and there would be some strong deposit build up in the last quarter of this calendar year as well. So the target is north of 20% for the upcoming year. So on the spread side, obviously, it depends on what are you mapping with. So in terms of cost of fund, as I shared, it's 5.01% for the domestic franchise. You can just easily do the math. If a treasury bill for 1 year tenure is yielding at around 11.03% or 11.3%, the spread that you make on the basis of total cost of fund would be close to 6%. However, if you actually map it with the saving account generation, for which there is an MDR application of 9.5%, you need to plug in the CRR cost of 6%, which takes the total cost to close to 10.2%. So for that, if you map it with the saving deposits, the total spread on our treasury bill would be limited to 80 basis points approximately.

Got it. Next question is on the floating rate PIBs, he's asking if they can reset in 3Q 2025?

Majority of the portfolio is reset. However, since we are active in the market, obviously, there are -- certain tranches would be repriced in the times that follow, but we don't expect a significant impact on the net interest margins as we trade ahead for the fourth quarter in terms of repricing of investments.

Got it. A couple of more questions that he has. He's asking about the remittance income and what sort of growth you are expecting for CY '26, followed up by your cost-to-income target for 2025 and 2026?

Well, on the remittance side, I believe with some change in the regulation that was introduced somewhere in June, July, where the market incentive was done away with by the Central Bank of Pakistan. Now we believe that some sanity would prevail and the intensified competition that we have observed on the remittance side would be normalized in the times to come. So it's not only limited to MCB, I can safely tell you that the entire industry has recorded significant expenses or reduction in income in terms of the remittance channel. For us, it's, I believe, minus PKR 3-point-something billion for the remittance side alone. So going ahead, we expect this situation to normalize. And we would never want it to be a negative number. If we are able to channel the remittance flows that we carry as of now, around 12% share on the remittances side, which is approximately $4 billion plus, we expect decent contribution coming in from the remittance side. I can't quote an exact number, but if the market remains a bit competitive, obviously, it would take this impact on the remittance income number as well.

Perfect. We have a raised hand from [ Mr. Suleman Maniya ].

Thank you, Intermarket, for holding this. Thank you, MCB, Hammad bhai, for your presentation. What I want to ask you, Hammad, bhai, is like what is the competition which MCB Islamic is looking out in the Islamic banking space? And also, there is going to be a big transition in the Islamic banking space over the next few years at Meezan Bank, right? So where should we as investors look at how MCB Islamic is going to go through this space? Where do you see this -- the Islamic bank to be over the next 3 years in the entire space?

Thank you, Suleman, for the question. So for our Islamic franchise, you would observe that we have been operationally building up the capacity. So previously, we were close to 150-odd branches. That's not too long ago. But we have scaled up the operational network to 3 or 5 branches, and there is a plan to add or more to the brick-and-mortar channel. Apart from that, as I shared in the presentation, we were operating on a different digital platform. We have very recently upgraded ourselves to OBDX platform. With digital account opening coming into play, we expect some decent traction on the interbank relationships on the MCB Islamic side. So with reference to your question on the competition. Currently, I believe if we look at the Islamic banks in particular, I'm not talking about the Islamic banking division of our big conventional bank. If you look at the Islamic banks, the competition isn't there. It's Meezan Bank. And next to it, I believe, I would rate all the other banks operating in a similar kind of territory. So that provides us the comfort, that provides us the strength to actually get into that. We would want to be ranked as second or third in terms of Islamic banking entities, particularly, in the next 3 years that come our way. So as I said, the growth that we see on the balance sheet side hasn't been that phenomenal for our Islamic banking franchise. But with the right tools that we have for the Islamic banking subsidiary, we are hopeful that you would see a bigger, better contribution coming into the group results from this franchise.

Sir, two questions. I just got a car from MCB Islamic at [ K+1% ]. So I was just wondering, I mean, till what level will these Islamic banks actually compete until -- in these auto loans. And when you talk about growth, obviously, we have to understand that MDR was recently applicable on Islamic banks, right? So that has obviously eroded profitability by a certain number. Underlying growth still happens to be quite strong, if I'm not wrong.

Yes, it is. Okay. So coming back to your first question, I believe the appetite for the consumer banking growth is there. You would have observed a similar kind of attraction for MCB numbers. We were able to add approximately 18%, 19% to our portfolio on the consumer lending side. And much of it is tilted towards the auto financing segment. So similar situation in play for MCB Islamic and Islamic is auto financing. So with reference to the growth that you see, I do understand that the performance numbers don't reflect pretty good for the small Islamic bank. It's a drop of around 40% on average across the industry for the 9 months period. The impact of MDR would be diluted, obviously, when we are able to capitalize or work more on the current account side. That remains the name of the game on a group wide as far as MCB is concerned. So hopefully, you would see better performance numbers in the next quarter when we close the year end, you'll see a decent contribution coming in from the Islamic banking franchise.

Sir, last question. Can we see some M&A activity from MCB Islamic to enhance the portfolio? And best of luck for the future.

Suleman, it's always on the cards. We are always on a lookout. Anything that makes financial sense to us that falls within the risk appetite that we have for ourselves, we will always go ahead with it. And thank you for the wishes.

So our next question is from -- it's a follow-up from [ Waleed Rathore ]. He is asking if there's any further repricing expected in Q4? And there's another question linked by Waseem from NBP Funds. He's asking how much of the fixed portfolio is expected to mature in 2026?

Well, no significant maturity as far as the fixed rate portfolio is concerned in the immediate 6 months or so. So there would be some maturities due, but it would not impact the total book significantly. On the floater side, as I covered, it's a dynamic process. Obviously, when you carry a base of PKR 1.2 trillion floaters, obviously, something would come into play in terms of repricing, but the impact of that is not significant for the fourth quarter. So I can safely say that almost -- not almost, but majority floaters have been repriced as we speak today. And we don't expect any NIM compression on account the repricing of the outstanding protest that we have in the book as of 30th September.

Right. We have a question from Fiza. I understand you covered this in your presentation. She's asking what is the yield on fixed rate PIBs, I think the rest you've already answered.

Yes. The fixed rate PIB yield is 12.29% on the outstanding stock.

Hammad, I think your voice isn't coming through.

Were you able to hear me?

Yes. Can you repeat, sorry?

The fixed rate PIB yield is 12.29%.

We have a couple of questions from [ Muhammad Mushtaq ]. He's asking, could you please share how many CDM machines MCB Bank currently operates? And among the new branches, how many will be Islamic and how many will be conventional?

Sorry, can you repeat the questions -- second part of the question, Yusra?

Regarding the new branches that you're going to be opening, he wants to segregate them, if you could, between Islamic and conventional, the new branches that you're now looking to open.

Okay. So Mushtaq, thank you for your question. So responding to your first question, currently, we don't have any operational CDM. It is in the process of deployment as we speak, just to bring the forum on board. We are in the process of outsourcing our ATM and card management system to Euronet. And the prime reason for that is the agility, flexibility and time to market. We want to gain on these 3 particular aspects. And hopefully, this transition would be completed within this calendar year. So we will be rolling out the CDMs. We understand there is a regulatory mandate assigned to all the banks to have 25% of the total brand strength ATMs deployed by June 30, 2028. So that's part of our strategy, and you will see that coming into play by identifying key areas where we see that a CDM deployment will serve the purpose more. With reference to your second question, we, being MCB operating a wholly owned Islamic subsidiary, the branch expansion plan that I shared of 40-plus branches would be all conventional in nature. Our subsidiary would be eyeing opening Islamic banking branches. And I believe the plan there is to add another 10 to 15 branches in the upcoming year.

Thank you for that comprehensive response, Hammad. So we have a question from Mustafa Mustansir from Taurus Securities. He's asking if you could share the strategy for the growth in current accounts? I understand this is a popular question in the context of such impressive current account growth during the current year.

So thank you for the question, Mustafa. But I believe it's a blend of everything coming into play. So first and foremost, I would tag it or associate it with service quality. So there is a lot of focus on the service quality improvement. There were a lot of concerns that were voiced by our customers, and we have been actively working day in, day out to make sure that we improve our service quality levels. By virtue of an introduction of a scheme as well, which rewards our operational staff, if we are able to reduce the number of complaints associated with that particular regime or reducing the time for opening of an account. So these are things which are in play. Apart from that, as I shared in the presentation, we are working on deepening the existing relationships. We have a lot of -- a huge customer base, which is keeping balances as low as PKR 10,000 with us. So with some direct engagement from the field formations, we have been able to get some traction on it. There is some decent work done on government activation. So a huge population of our total customer base is in government. And they do keep some balances with us, and we are trying to actually activate that relationship and make sure that we are able to deepen it further. Other than that, one thing which has worked well for us is the remittance portion. So when we channel close to PKR 4 billion -- $4 billion every year, we just converted at PKR 280, that's close to $1.2 trillion worth of deposits flowing through your channel. So what we are doing is we are trying to capitalize on this remittance flow, working on the beneficiary side and make sure that we activate deposit relationship with the beneficiaries here. Lastly, there has been an incentive scheme that has worked well for MCB, where we reward the information for the current account mobilization within the quarter. So there have been schemes throughout the year, and I can tell you that there has been some decent traction on the current account side. And obviously, it's all tilted towards averages. So we are focused on building current account averages rather than looking at the period numbers. And lastly, I believe it has to do more with the feet on street. So we are beefing up our retail franchise. We would be adding further strength to our retail franchise, front-end staff in the quarters that follow. And then the number would be massive. I believe we are eyeing close to addition of 3,000 to 4,000 staff, which will be solely working on the deposit mobilization side.

Thank you so much for that, Hammad. So we have a question -- a follow-up from [ Waleed Rathore ]. He is asking, can you kindly repeat average yield on floating PIBs?

Average yield on floating PIBs is close to 12.14%.

We have a question from Saqlain Paracha from ARN Financial. He's asking, can we expect the IPO of MCB Islamic?

Well, this thing has been kind of a constant question for the last many calls, I would say. As I shared earlier, it's in review, that's being discussed at an appropriate level. But I believe for an IPO, there has to be some performance number reflected as well from a particular entity. So I wouldn't say that there is a time line tag to it. We are constantly evaluating the situation. And whenever the management or the Board feels that this is an appropriate time to proceed with it, we will do that. We will be guiding the market accordingly, [Foreign Language], on this.

Great. We don't have any further questions on the chat box. So I'll refer to the ones that we've received by email. So regarding the remittance business now, I understand that there have been some relaxations and rollbacks on the incentive scheme. So what is now the guidance there?

Well, Yusra, I believe the intense competition that we were facing in the last few quarters has, to an extent, normalized. It has not gone away altogether, but normalized levels. Just to bring the forum on board, there used to be a marketing incentives getting from PKR 1 to PKR 2 for every dollar that a particular bank will bring in through its tie up. And it would be a function of how much growth you registered over the last fiscal year. So for the sake of instance, if you are growing your flows by 10%, you get $1 per rupee; if you grew it by 15%, you get PKR 2 per dollar. But that scheme was in play for the last 2 years. It's done with as of 30th of June 2025. Now it's QAR 20 for every $200 transaction that is channeled through a particular bank. So obviously, we do understand that FX has been a cause of concern. And every big player is actually going all out in this particular market to ensure that the flow is channeled through its own network. So post June 30, 2025, we have seen it normalizing a bit. Obviously, when you actually reach a tie-up along with your competition, the ask of the tie-up would be if it is being offered PKR 1.5 to $1, we would have to pay PKR 2.5 or PKR 2 to $1 to channel it through our network. So that competition is actually slowing down. I believe a lot of it has been taken by almost all the major players in their remittance flows, and we expect it to rationalize in the time. So we want to see, and I hope and we see a green number coming in from the home remittances side. By that time, I'm referring to the income number there. Currently, it's a red. It's something that we -- or the banks are paying out of their own pockets, which are under more remittance flows.

Another question is on loan growth. So what sort of growth can we now expect, particularly in the consumer segment and the corporate SME, since there has -- of course, there's been some rollbacks there? And what is now the recovery pipeline looking like in terms of asset quality?

Well, on the loan side, I believe it would be a muted kind of growth for the upcoming year. However, if we look at the segments, as you pointed out consumer, we expect consumer to perform better than the remainder segment that is the SME part of the corporate part. And the main issue is that we have been reiterating that advances remain a mainstream business line for us. It opens up avenues for cross-sell for the bank. However, there is a very limited pool of good quality assets out there. And obviously, we won't take exposure on anything that does not fall within the risk appetite that we have defined. So on the consumer side, we expect the growth that we have reported for the 9 months period to continue. On the interest rate side, I'd call is that there is a period of pause. We don't expect the interest rate to move in the next 6 months or so. It would remain at similar levels. So having said that, on the NPL side, we don't expect any accretion, significant accretion in our NPL base. A lot of it has already been objectively or subjectively classified in the books. However, I won't rule out any small additions to the NPLs as it remains a BAU.

Just a final question is basically on the NII, given your outlook for interest rates, where do you see the growth now? Or do you expect a trimming in 2026?

Well, two dimensions to this. One is that I believe much of the impact of the monetary easing is already reflected in net interest margins. And while we continue to build up on the no-cost current account mobilization, I'm fairly confident that you would see the net interest margins improving with the passage of time. Secondly, a few quarters back on the saving account side, there was a serious negative carry. If you plug in the CRR cost and the MDR, there was a negative carry versus the treasury bills. It has now converted into positive. It's a green now, but not very significant. However, it depends how the yields move as we tread ahead. We have seen a 1-year treasury bill auctioned 11.35% yesterday, that's almost 90 basis points higher than what it used to be a couple of months back. So that is actually providing some room to focus more on the saving account side as well. But again, we would be focusing on the rack rates. We are not into the play of offering high or special rates or soliciting high-cost deposits. We have a huge base of PKR 960 billion as of 30th of September in terms of saving accounts. And it's -- the entire local saving currency is at rack rate, not even a single rupee of special deposits offered there.

Got it. Thank you so much, Hammad. And given that we are nearly 40 minutes past the start time, I think we can conclude the call. Thank you so much, and thank you so much, everyone, for joining. Hammad, if you would have any concluding remarks, please go ahead.

So first of all, thank you, everyone, for your interest in MCB Bank Limited. But I can assure you that we have a clear strategy chalked out for us. The focus would remain to capitalize on our key strengths. And our key strength as we have been reiterating have been low or no-cost deposit mobilization, ensuring that our asset quality remains checked, and we keep a tab on our operating expenses. So we would continue to focus on these particular areas, while the digital transformation remains in full swing, which is going to aid our retail business as we tread ahead. So we are very hopeful that we will continue to deliver the exceptional results that we have been doing over the last few quarters, and we expect to build up on the momentum that we have gained in this year, particularly, in terms of current account mobilization. Thank you.

Thank you, Hammad. With that, ladies and gentlemen, we would like to conclude the call. Thank you so much, everyone, for joining the presentation. And thank you so much, Hammad, for giving -- taking the time. See you next time, [Foreign Language]. Thank you, everyone.