Meezan Bank Profits Dip, Non-Performing Loans Rise

Islamabad: Meezan Bank Limited (MEBL) reported a 9% year-on-year decline in its standalone profit after tax, reaching Rs24.1 billion in the second quarter of 2025. This translates to earnings per share (EPS) of Rs13.4 for the quarter, bringing the first half of 2025’s EPS to Rs25.7. The bank also declared a dividend per share (DPS) of Rs7.0, totaling Rs14.0 per share for the first half of the year. However, the bank’s non-performing loan (NPL) ratio increased to 2.5% from 1.5% in the previous fiscal year, primarily due to challenges in the steel and textile industries.

Despite the profit downturn, MEBL saw a 15% yearly increase in fee and commission earnings for the first half of 2025. Trade-related fees contributed significantly, rising by 23% year-on-year. The financial institution holds an 8.6% share of total industry deposits, with individual depositors making up approximately 70% of its deposit base. The bank projects average deposit expansion exceeding 20% in the coming months.

MEBL’s capital adequacy ratio (CAR) is currently at a healthy 23.6%, but administration forecasts a potential 50-100 basis point decline by the end of 2025. Approximately 80% of the institution’s Sukuk investments are in variable-rate securities, yielding 11.5%, with a significant portion due for repricing in October-November 2025. The bank’s cost-to-income ratio improved to 25.6% from 29.2% in the previous year due to a reversal in variable compensation spending, and MEBL aims to maintain this ratio within the 35-40% bracket going forward.

Following a cautious development approach, MEBL added six new branches in the first half of 2025, expanding its network to 1,057 locations, with plans to reach 1,100 by year-end. The bank’s subsidiary, Al-Meezan, the largest asset management firm with Rs617 billion in assets under management, reported a profit after tax of Rs1.5 billion in the first half, representing a return on equity of 56.5%. MEBL is also developing a Shariah-compliant alternative to traditional credit cards, aiming to enhance its position as a leader in Islamic retail banking. The bank already maintains a strong debit card presence with 4.2 million cards.