Karachi, October 21, 2024 – Meezan Bank Limited has reported an impressive 34% year-on-year (YoY) growth in profit after tax for the nine-month period ending September 30, 2024.
According to consolidated financial results submitted to the Pakistan Stock Exchange (PSX), the bank recorded a profit after tax of Rs 78.79 billion, a substantial increase from Rs 58.91 billion during the corresponding period last year.
During a board meeting held on October 21, 2024, Meezan Bank’s directors declared an interim cash dividend of Rs 7 per share for the third quarter (3Q2024) and the nine-month period, in addition to the Rs 14 per share already distributed. The latest dividend brings the total payout to Rs 21 per share for the first nine months of the current fiscal year.
Slightly Lower Than Expectations But Robust Growth
Topline Securities Limited provided a detailed commentary on Meezan Bank’s performance, highlighting that the bank posted earnings of Rs 25.8 billion for 3Q2024, translating into an earnings per share (EPS) of Rs 14.4. This represents a modest 1% YoY increase, though it marks a 3% decline on a quarter-on-quarter (QoQ) basis. Nonetheless, the cumulative earnings for the nine-month period amounted to Rs 77.5 billion, with an EPS of Rs 43.3, showcasing a significant 34% YoY surge.
Despite this strong overall performance, the 3Q2024 results were marginally below industry expectations due to elevated provisioning and tax expenses. Meezan Bank recorded a provisioning expense of Rs 2.6 billion in 3Q2024, a stark contrast to the reversal of Rs 935 million in the previous quarter (2Q2024). This increase is primarily attributed to the implementation of IFRS-9, which impacted the bank’s provisioning dynamics.
Tax and Asset Quality Concerns
The bank’s effective tax rate stood at 55% for the third quarter and 53% for the nine-month period, reflecting additional taxes imposed due to its lower Advance-to-Deposit Ratio (ADR). As of September 2024, Meezan Bank’s gross ADR had declined to 40%, down from 48% in June 2024, contributing to its higher tax burden.
Net Spread and Income Growth
On the positive side, Meezan Bank’s net spread earned saw remarkable growth, climbing 20% YoY and 9% QoQ to Rs 77 billion in 3Q2024. This expansion was driven by higher asset yields, favorable asset repricing, and robust growth in zero-cost current account deposits. Other income streams also performed well, with a 5% YoY and 23% QoQ increase, largely fueled by higher fee and commission income.
Cost Efficiency Amid Branch Expansion
Although Meezan Bank’s other expenses rose by 19% YoY and 5% QoQ, reaching Rs 23.2 billion, driven by its expanding branch network and inflationary pressures, its cost-to-income ratio improved slightly. The ratio stood at 28% in 3Q2024, compared to 29% in 2Q2024, demonstrating the bank’s operational efficiency despite rising costs.
Meezan Bank’s financial performance continues to underscore its resilient business model, strong asset management, and steady growth, even in the face of heightened regulatory provisions and macroeconomic challenges.