Meezan Bank Reports Lower Profits But Maintains Dividend Payout

Karachi: Meezan Bank Limited (MEBL) announced its financial results for the first quarter of the calendar year 2025, revealing a profit of PkR22 billion, equivalent to earnings per share of PkR12.3. This marks a decline of 12% compared to the same period last year and an 8% decrease from the previous quarter. The bank’s performance exceeded expectations slightly, primarily due to higher-than-anticipated net interest income (NII). Alongside the results, the bank confirmed an interim cash payout of PkR7.0 per share.

The bank reported a net interest income of PkR61.8 billion for the quarter, reflecting an 8% decrease year-on-year and a 15% drop quarter-on-quarter. This decline was attributed to a reduction in mark-up earned, which outweighed the decrease in mark-up expenses. Mark-up earned fell by 10% year-on-year and 8% quarter-on-quarter to PkR107.6 billion, following a significant decline in yields from investments and advances. Consequently, the bank’s estimated net interest margins (NIMs) dropped to 7.1% from 10.4% in the same period last year.

Non-interest income for the bank increased to PkR8.2 billion, up 29% from the previous year. This growth was driven by a substantial rise in foreign exchange income, which increased 3.3 times year-on-year and 7.2 times quarter-on-quarter, and a 10% year-on-year increase in fee income, despite an 8% quarter-on-quarter decrease. However, gains on the sale of securities decreased by 81% year-on-year and 100% quarter-on-quarter.

The bank recorded a provision of PkR1.9 billion, a significant increase from PkR263 million in the same quarter of the previous year, but a decrease from PkR7.3 billion in the last quarter of 2024. Non-markup expenses were reported at PkR19.6 billion, down 7% from the previous year but up 9% from the previous quarter, mainly due to lower compensation expenses.

The effective tax rate for the quarter was 54.5%, up from 52.2% in the first quarter of 2024 but down from 58.3% in the last quarter of 2024. This change was attributed to increased effective tax rates for banks introduced last year.

Despite the decrease in profits, the bank maintained its dividend payout at PkR7.0 per share for the first quarter. Analysts from AKD Securities Limited have expressed a ‘BUY’ stance on Meezan Bank, with a target price of PkR356 per share by December 2025 and a dividend yield of 9% over the same period.