MCB Group - A decent first half demonstrates resilience

MCB Group (MCBG) reported H126 operating income growth of 7.7% boosted by strong trading growth (+48%), with net interest income increasing modestly (+4%) to MUR14.1bn. PBT grew 15.4% y-o-y to MUR14.5bn. The company's core business grew faster than the headline figures suggest, as H125 results included one-off gains from Visa and Mastercard shares. Operating expense growth was high (+17%), mainly driven by higher staff costs, which caused the cost to income ratio to rise 3pp to 37.8% for H126. The company believes staff costs growth is set to moderate in H226. The effective income tax rate rose 6pp to 26%, driven by changes in Mauritian tax laws. We have kept our forecasts unchanged, as the decent growth was largely counterbalanced by the previously flagged increase in taxation. Despite this, the stock continues to trade below its historical valuation range.

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