Karachi: Meezan Bank Ltd (MEBL) announced a significant financial upturn for CY24, declaring a profit of PkR101.5 billion, marking a 20% year-over-year increase. The growth is attributed to higher net profit earned and an increase in total other income. Accompanying the results, the bank announced a final payout of PkR7.0 per share, bringing the full-year payout to PkR28.0 per share.
According to a statement by AKD Securities Limited, MEBL’s return on financings, investments, and placements rose to PkR494 billion in CY24, compared to PkR432 billion in the previous year, driven by volumetric growth. Return on deposits and other dues expensed reached PkR207 billion, reflecting a 1% increase year-over-year, controlled by a lower policy rate during the period.
The bank reported an increase in total other income by 31% year-over-year to PkR28.9 billion, attributed to a rise in fee and commission, dividend income, and gains on securities. Operating expenses increased to PkR84.6 billion, up 18% from the previous year, resulting in a cost-to-income ratio of 26.8%, an improvement from 28.9% in CY23.
Meezan Bank’s capital adequacy ratio weakened to 20.4%, down from 22.4% in the previous year, due to an expansion of the financing portfolio. Return on equity also declined to 47% from 56.3% in the previous year. Total deposits grew by 17% to PkR2.58 trillion, with CASA deposits increasing by 21%, resulting in a CASA mix of 93% compared to 89% last year.
The bank’s gross financing grew by 57% year-over-year to PkR1.56 trillion, driven by corporate and SME/commercial lending. Investments increased to PkR1.87 trillion from PkR1.57 trillion in CY23, with GoP Ijara Sukuk comprising the majority of investments.
MEBL’s non-performing loan ratio improved slightly to 1.6% from 1.7% in CY23, although the NPL coverage ratio declined to 165% from 179%. The bank expanded its branch network by adding 47 new branches, with plans to open additional branches in high-potential areas.
The bank handled PkR1.6 trillion in imports and PkR1.1 trillion in exports, accounting for a 4.5% market share. Al Meezan Investment contributed a profit after tax of PkR2.9 billion, with a return on equity of 59.5%. MEBL’s management does not intend to list Al Meezan Investments at the Pakistan Stock Exchange, citing no capital requirements for the company.
MEBL’s management anticipates the policy rate to remain between 11% and 12%. The bank plans to maintain its dividend at the current level, contingent on policy rate and asset growth. The bank’s total number of debit cards increased to 3.99 million, with internet and mobile banking accounting for 78% of digital throughput.
The bank’s exposure to circular debt through GoP remains minimal, with management expecting the issue to resolve in the medium to long term. AKD Securities Limited maintains a ‘BUY’ stance on MEBL, with a projected target price of PkR356 per share by December 2025, offering a potential upside of 50% and a CY25 dividend yield of 10.6%.