Meezan Bank Reports Strong Results Amid Cost Controls and Securities Gains

Karachi: Meezan Bank Ltd (MEBL) released its fourth quarter results for the calendar year 2024, reporting an unconsolidated net profit after tax of PKR 24.0 billion, or PKR 13.4 per share. This marks a decline of 9% year-over-year and 7% quarter-over-quarter. The results exceeded expectations due to higher gains on the sale of securities and reduced operating expenses, accompanied by a cash dividend of PKR 7 per share, bringing the year’s total payout to PKR 28 per share.

According to a statement by AKD Securities Limited, Meezan Bank’s net spread earned in the fourth quarter reached PKR 72.3 billion, reflecting a 1% year-over-year increase driven largely by balance sheet growth. The bank’s deposits grew by 16.3% year-over-year to PKR 2.6 trillion as of December 2024.

However, the net interest margins for the quarter were estimated at approximately 9.8%, a decrease of 140 basis points year-over-year and 100 basis points quarter-over-quarter, attributed to a decline in profit on deposits. Other income rose significantly by 54% year-over-year and 63% quarter-over-quarter, primarily due to substantial gains on the sale of securities and increased dividend income. Fee and commission income also saw growth, rising by 19% year-over-year to PKR 5.9 billion in the fourth quarter.

The bank recorded a provisioning expense of PKR 7.3 billion, up from PKR 2.9 billion in the same quarter last year, and PKR 2.6 billion in the previous quarter. Non-markup expenses dropped to PKR 18.1 billion, showing reductions of 14% year-over-year and 22% quarter-over-quarter, which improved the bank’s cost-to-income ratio to 21.8% for the quarter.

Meezan Bank faced an effective tax rate of 58.3% for the quarter, up from 51.3% in the previous year, due to an increased tax rate for the banking sector. The government has planned further tax rate increases for the banking sector over the next few years while abolishing the Advances to Deposit Ratio-based tax starting in 2024.

Despite regulatory changes, Meezan Bank’s strong deposit growth, efficient asset deployment, and robust capital adequacy ratio support its investment appeal. Although the stock trades at a forward price-to-book ratio of 1.6x, the expected average return on equity of 25.5% from 2025 to 2027 remains attractive compared to peers.

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