Meezan Bank Limited announced (MEBL) announced financial result for 4QCY20

Meezan Bank Limited announced (MEBL) announced below expected earnings of PKR 2.9/sh (down 2.6/36.2% on YoY/QoQ), taking CY20 earnings to PKR 15.7/sh (up 45.5% YoY). Reason behind the decline in earnings was provisioning of PKR 4.0Bn booked in 4QCY20. The bank also announced cash dividend of PKR 2.0/sh in 4QCY20, taking CY20 payout to PKR 6.0/sh.

Key highlights of the result are summarized below:

Net spread of the bank improved by 12.8% on a YoY basis mainly due to amplified income from investment book (investments increased by 60.6% since Dec’19). On a QoQ basis, NII declined by 13.3% due to NIMs compression. Going forward, we expect NII to remain under pressure on account of aforesaid reason.

Non-Interest Income of the bank posted an increase of 11.8% YoY to PKR 2.9Bn in 4QCY20 mainly due to higher fee income (↑32.0% YoY) on account of improved trade business post Covid-19 outbreak. Non-Interest Income witnessed an increase of 8.1% YoY to PKR 10.1Bn as the bank booked PKR 683Mn capital gain in CY20 vs a loss of PKR 418Mn in CY19.

The bank booked provision expense of PKR 4.0Bn in 4QCY20, taking overall provisions for CY20 to 8.2Bn. Operating expenses during the quarter declined by 0.5/8.2% on YoY/QoQ basis to PKR 6.9Bn that takes CY20 operating expenses to PKR 28.8Bn, up 16.0% YoY.

We have a BUY stance on the stock with Dec’21 TP of PKR 120/sh, providing total return of 20% from the last close.

Courtesy by Meezan Bank Limited announced (MEBL)

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