MEBL announced an EPS of PKR 4.53/sh in 3QCY20 (↑4/63% QoQ/YoY), that takes 9MCY20 earnings to PKR 12.8/sh, ↑77% YoY. The result was accompanied by a surprise cash dividend of PKR 4.0/sh in 3QCY20.

Main deviation originated from higher than expected Net Interest Income (NII) that remained sequentially flat to PKR 7.4bn (↓1/↑40 QoQ/YoY) in 3QCY20. Going forward, we expect NII to remain under pressure on account of repricing of assets.

Non-mark-up income increased by 17% QoQ to PKR 2.1bn mainly due to high fee income. We suspect that improvement in international trade post-COVID lockdowns may have lifted the fee income during the quarter. To highlight, trade related fees and commission accounts for 40% of the total fee income.

Operating cost for the quarter clocked in at PKR 7.5Bn depicting a 16% YoY increase. However, increase in net interest income reduced cost/income by 5.7ppts YoY to 39%. On a sequential basis, cost/income ratio remained relatively flat.

Provision charges for the period clocked in at PKR 1.1Bn compared to PKR 1.5Bn in 2QCY20. Provision charges during 9MCY20 has now increased to PKR 4.2Bn which is 1.7x higher compared to PKR 2.5Bn in 9MCY19.

Further analysis would be done once detailed results are out. We maintain our BUY stance on the stock. ((BMA Capital Management Ltd.)