MCB Bank, the fourth largest commercial bank of Pakistan, on Thursday announced that it will acquire 55 per cent shares in Shariah-compliant Burj Bank — one of the five Islamic banks operating in Pakistan.
MCB did not disclose the value of the stake. Burj Bank is the smallest Islamic lender with an asset-size of Rs44.68 billion as of September 2013, representing around 5 per cent of the Islamic industry's total assets. The bank has a network of 75 branches across Pakistan and its deposit-base is Rs34 billion, which accounts for 4 per cent of the total Islamic deposits.
"MCB Bank Limited has reached an understanding with the majority shareholders of Burj Bank Limited to invest in new and existing shares. As a result of this investment, the existing strategic shareholder of the bank namely ICD — Islamic Corporation for the Development of the Private Sector (the private sector arm of the Islamic Development Bank Group — an international financial institution/multilateral with their head office in Saudi Arabia) will also inject further capital in the bank and Burj Bank will also meet the Minimum Capital Requirement (MCR) of Rs10 billion, as required by the State Bank of Pakistan," MCB Bank said in an emailed statement to Khaleej Times.
"As a result of the investment, MCB Bank will own approximately 55 per cent of the shares of Burj Bank Limited. Burj Bank with its 75 branches together with MCB's 27 branches which are intended to be merged into Burj Bank after regulatory approvals including State Bank of Pakistan will make Burj Bank a significant player in Islamic Banking in Pakistan and also bring a fresh wave of growth for Burj Bank Limited given the strategic partnership between two of the strongest financial entities in the region," the statement added.
Last Tuesday, MCB bank announced its 2013 financial results, declaring a profit-after-tax of Rs21.5 billion, higher by four percent on year-on-year basis.
The BoD met under the chairmanship of Mian Mohammad Mansha. The bank is satisfied with the results and said in the statement that despite the challenging operating and regulatory revisions impacting net interest margins, MCB has posted remarkable results for the year ended December 31, 2013.
The bank also announced a final cash dividend of Rs3.5 per share and a bonus issue of 10 per cent. The bank's operating expenses grew by nine per cent on year-on-year basis to Rs19.6 billion, which dented the profitability. However, support came in from higher non-interest income of Rs11.2 billion and better-than-anticipated reversals in provisions in write-offs to the tune of Rs2.8 billion.