Karachi: Meezan Bank has announced its financial results for the first quarter of 2026, revealing earnings that exceeded expectations. The bank recorded unconsolidated earnings of Rs23.4 billion, translating to an earnings per share (EPS) of Rs13.0, marking a 6% year-on-year increase and a 7% rise from the previous quarter.

According to JS Global, the bank's earnings were bolstered by a significant increase in non-operating income, which surged 36% year-on-year to Rs11.1 billion. This was largely driven by a 26% rise in fee and commission income and a 58% increase in dividend income. Additionally, foreign exchange income rose by 13% year-on-year to Rs1.8 billion.

The bank's net spread saw a slight decline, dropping 1% year-on-year and 4% quarter-on-quarter to Rs61.4 billion. This decrease is attributed to a 50 basis points decline in interest rates in December 2025. Operating expenses increased by 18% year-on-year but decreased by 4% quarter-on-quarter to Rs23.2 billion, with the cost to income ratio recorded at 31.9%.

Meezan Bank also reported a provision expense of Rs449 million in the first quarter, which is down 76% year-on-year but up 78% from the previous quarter. The effective tax rate stood at 52.21%, slightly lower than the previous year's rate.

On the balance sheet, deposits grew by 10% quarter-on-quarter to Rs3.6 trillion, with investments up by 3% to Rs2.7 trillion, while advances decreased by 9% to Rs1.5 trillion. The bank declared an interim cash dividend of Rs7.5 per share, surpassing expectations.

Meezan Bank continues to be a favored choice in the banking sector, with its stock currently trading at a 2026 estimated price-to-earnings ratio of 9.7x and a price-to-book value of 2.6x, alongside a dividend yield of 6%.