Islamabad: Meezan Bank (MEBL) reported a 10% year-on-year decline in its second-quarter 2025 earnings, posting a profit of Rs24 billion (Rs13.4 earnings per share), despite exceeding market projections.

The financial institution's performance surpassed forecasts primarily due to reduced operational costs and marginally improved spread income. The bank's profit, however, showed a 9% quarter-on-quarter growth.

Simultaneously, MEBL declared a second interim cash dividend of Rs7.0 per share for the second quarter of 2025, aligning with market anticipations. This brings the total dividend for the first half of 2025 to Rs14.0 per share.

Net spread income experienced a 9% yearly contraction but rose 4% quarter-on-quarter, reaching Rs64 billion in the second quarter of 2025. This quarterly expansion is attributed to an 18% year-to-date and 6% quarter-on-quarter surge in deposits. Further details on the deposit composition are awaited.

The bank's operating costs decreased significantly, falling 25% year-on-year and 15% quarter-on-quarter to Rs16.7 billion in the second quarter of 2025. This substantial reduction stems from the reversal of certain variable compensation charges totaling Rs10.9 billion in the first half of 2025.

Provision expenses reached Rs1.5 billion in the second quarter of 2025, contrasting with a reversal of Rs935 million in the same period of 2024 and an expenditure of Rs1.85 billion in the first quarter of 2025.

Other income witnessed a 54% yearly increase, reaching Rs8.2 billion in the second quarter of 2025. This yearly upswing is primarily due to a substantial rise in foreign exchange income to Rs1.6 billion and a 21% growth in fees and commission income to Rs5.3 billion during the quarter.

The bank's effective tax rate stood at 55.3% in the second quarter of 2025, compared to 54.5% in the first quarter of 2025 and 51% in the second quarter of 2024.

On the balance sheet front, deposits expanded by 5.6% quarter-on-quarter, exceeding Rs3.0 trillion. Investments climbed by 17% quarter-on-quarter to Rs2.4 trillion, while advances contracted by 18% quarter-on-quarter to Rs1.14 trillion in the second quarter of 2025.

MEBL maintains its status as a favored choice within the banking sector. The stock is presently trading at a 2025 estimated price-to-earnings ratio of 8.1x and a price-to-book value of 2.4x, with a dividend yield of 7%.