KARACHI - MCB Bank is expected to post profit after tax (PAT) of Rs7.5 billion (EPS Rs10.89) with a cash dividend of Rs5.50 per share. Moreover, net interest income (NII) of the bank is expected to grow by significant 44 per cent YoY. The bank is scheduled to announce its financial result for 1HCY09 on August 08 (tomorrow). Considering the lower credit growth and marginally higher ADR of 76 per cent for MCB in 1QCY09 against the required 70 per cent, experts expect the banks loan book growth to remain passive. However, higher exposure in fixed income instruments in recent T-bill auctions, they expect 6 per cent QoQ growth in the banks earning assets. Another major factor contributing to the top-line growth was lower cost of deposits on the back of higher CASA (80 per cent). Although the impact of contracting lending rates (KIBOR declined by 294bps during 1HCY09) is expected to affect banks margins, NIMs are expected to settle at around 9 per cent, declining by 60bps QoQ. In addition, asset quality of the bank has deteriorated significantly in the recent period. As per 1QCY09 financials of the bank, NPLs to loan ratio increased by 280bps to 7.6 per cent thus mounting pressure through provisioning charges. Considering the prevailing economic downturn and supply-side issues with the industries, we expect NPLs to accelerate by 8 per cent QoQ in 2QCY09, said Abdul Shakur at InvestCap Research. Maintaining loan losses at 71 per cent, provision charges are expected to grow by significant 192 per cent YoY. However, analysts expect marginal support from better performance of equity portfolio in 2QCY09 (KSE-100 up by 6 per cent QoQ) with declining yields of T-bills and bonds resulting in higher investment values. As the fixed income instruments have a significantly higher share in AFS investments, appreciating values of these instruments would help in suppressing earlier revaluation losses. Furthermore, other income is expected to post a 10 per cent YoY growth in 1HCY09, however, admin expenses are expected to grow by 68 per cent YoY on the back of diminishing benefit of actuarial gain on pension fund, higher salaries expenses and depreciation cost. Analysts expect PAT of Rs7.5bn for 1HCY09 (EPS Rs10.89) translating into a decline of 2 per cent YoY.