Karachi: Meezan Bank Limited (MEBL) recently held a corporate briefing session to discuss its financial performance and future outlook. The bank reported a profit after tax of Rs89.0 billion for the year, reflecting a 12% decline compared to the previous year. Despite this, the bank declared a dividend of Rs7 per share for the quarter, culminating in a full-year dividend of Rs28 per share, with management signaling the intention to maintain this quarterly payout.
According to JS Global, the primary factor behind the decline in earnings was a reduction in net spread earned, as the policy rate decreased significantly from an average of 19.7% to 11%. However, the bank managed to counterbalance this pressure through substantial growth in deposits, which increased by approximately Rs620 billion on average. On the non-fund income side, foreign exchange income saw a significant rise to Rs5.5 billion, supported by higher trade volumes and improved spreads.
Conversely, capital gains experienced a sharp decline of 70% year-over-year, primarily due to the absence of one-off sukuk realizations recorded in the previous year. Operational efficiency remained strong with a cost-to-income ratio of 30.4%, while return on equity was recorded at 33.8%. The bank’s total assets grew by 23% to Rs4.81 trillion, driven mainly by a 39% expansion in the investment book and an 8% increase in the financing portfolio.
Total deposits rose by 28% to Rs3.3 trillion, with current and savings account (CASA) deposits growing by 25% to Rs3 trillion. The CASA mix slightly declined by 2 percentage points to 91%, yet it remains among the highest in the industry. Meezan’s market share stood at 8.8%, maintaining its strong position in the Islamic banking sector. The investment portfolio expanded to Rs2.60 trillion, with significant allocations to fixed-rate sukuk yielding around 11%. A large portion, approximately Rs2.17 trillion, is invested in Government of Pakistan Ijarah Sukuk.
Gross financing increased by 8% to Rs1.69 trillion, although asset quality showed slight deterioration, with non-performing financing rising by 23% to Rs31 billion, mainly due to exposures in the textile sector. The non-performing loan ratio increased slightly to 1.84%, remaining below 2%, with a coverage ratio of 146% indicating adequate provisioning. Liquidity and capital positions were robust, with a capital adequacy ratio of 19.2%.
The bank continued to expand its branch network to 1,105 branches across 363 cities, with plans to add 100-150 more branches this year. The trade business grew by 8% to Rs2.9 trillion, with exports contributing 38% of the total volume. Looking forward, management anticipates a potential policy rate hike of 100-150 basis points and plans to launch Islamic credit cards by 2027, marking a significant step in product diversification.