Meezan Bank Reports Decline in Quarterly Earnings Amid Rising Expenses

Karachi: Meezan Bank Limited (MEBL) has reported a decline in its third quarter earnings for 2025, with earnings per share (EPS) of Rs11.7, marking an 18% year-on-year decrease and a 13% quarter-on-quarter decline. The drop in earnings, which totaled Rs21 billion, was attributed primarily to higher-than-expected operating expenses, according to the bank’s latest financial disclosures.

Despite the earnings shortfall, Meezan Bank announced a third interim cash dividend of Rs7.0 per share for the third quarter, aligning with industry expectations and bringing the total dividend for the first nine months of 2025 to Rs21.0 per share.

Operating expenses rose by 13% year-on-year and 58% quarter-on-quarter to Rs26.4 billion. This increase was largely due to a normalization of expenses, as the previous quarter included reversals that had temporarily lowered costs. Consequently, the bank’s cost-to-income ratio increased to 35% from 26% in the same period last year.

The bank’s net spread earned decreased by 19% year-on-year and 2% quarter-on-quarter to Rs62 billion, influenced by a decline in investment yields. Provision expenses also saw a significant reduction, recorded at Rs0.3 billion in the third quarter, compared to Rs2.5 billion in the same quarter of the previous year and Rs1.5 billion in the preceding quarter.

Other income for Meezan Bank experienced a 44% year-on-year increase, reaching Rs9.4 billion, driven by a notable rise in foreign exchange income to Rs2.8 billion. The bank’s effective tax rate was recorded at 53.4%, a slight decrease from 55.3% in the previous quarter.

On the balance sheet front, deposits grew by 4.4% quarter-on-quarter, exceeding Rs3.2 trillion. Investments increased by 5.1% to Rs2.5 trillion, while advances decreased by 1.4% to Rs1.13 trillion.

Despite the challenges, JS Global maintains a “Buy” stance on Meezan Bank, with the stock trading at a 2025 estimated price-to-earnings ratio of 9.6 times, a price-to-book value ratio of 2.9 times, and a dividend yield of 6%.