AKD Research has published its commentary on MEBL’s 2QCY25 result, which is reportedly beating expectations on lower profit on deposits and curtailed expenses.

Meezan Bank Ltd (MEBL) announced its 2QCY25 financial results earlier today, wherein the bank posted NPAT of PkR24.1bn (EPS: PkR13.4) for the quarter, down 9%YoY/up 9%QoQ. The result is higher than our expectations, primarily due to lower-than-expected profit on deposits, along with lower admin expenses. In addition to the result, the bank announced an interim cash payout of PkR7.0/sh, in line with our expectation, taking the half-year cash payout to PkR14.0/sh.

·         Net spread earned was recorded at PkR64.0bn in 2QCY25, down by 9%YoY/up 4%QoQ, due to an increase in investment book on a sequential basis.

·         Profit on Islamic financing was recorded at PkR101.9bn, down by 22%YoY/5%QoQ, while profit on deposits was recorded at PkR37.9bn (down 37%YoY/17%QoQ). Notably, the bank’s estimated NIMs rose to 7.2% in 2QCY25 compared to 7.1% in the previous quarter.

·         Non-Interest Income clocked in at PkR8.2bn in 2QCY25, up 54%YoY, while remaining flat on a sequential basis. We attribute the increase in Non-interest income to higher fee income (up 21%YoY/down 3%QoQ), higher FX income (up 16.2x YoY/3% QoQ), and higher gain on sale of securities (up 12.0x YoY/ 58.9x QoQ).

·         Operating expenses were recorded at PkR16.7bn, down 25%YoY/15%QoQ. This resulted in a cost-to-income ratio of 21.5% compared to 28.1% and 26.6% in 2QCY24 and 1QCY25, respectively.

·         Credit-Allowance/Provisioning expense amounted to PkR1.5bn, compared to a reversal of PkR935mn in 2QCY24 and an expense of PkR1.9bn in 1QCY25.

·         Effective tax rate for the quarter stood at 55.3% (vs. 51.0%/54.5% in 2QCY24/1QCY25).

·         The script is currently under review.

Courtesy – AKD Research