Meezan Bank Ltd (MEBL) announced its 3QCY25 financial results earlier today, wherein the bank posted NPAT of PkR21.1bn (EPS: PkR11.7) for the quarter, down 18%YoY/13%QoQ. The result is in line with our expectations. In addition to the result, the bank announced an interim cash payout of PkR7.0/sh, in line with our expectation, bringing the 9MCY25 year cash payout to PkR21.0/sh, according to a report by AKD Research.

·        Net spread earned was recorded at PkR62.4bn in 3QCY25, down by 19%YoY/2%QoQ, due to lower yields on investments and advances.

·        Profit on Islamic financing was recorded at PkR102.6bn, down by 20%YoY/up 1%QoQ, while profit on deposits was recorded at PkR40.1bn (down 23%YoY/up 6%QoQ). Notably, the bank’s estimated NIMs declined to 7.0% in 3QCY25 compared to 7.2% in the previous quarter.

·        Non-Interest Income clocked in at PkR9.4bn in 3QCY25, up 44%YoY/14%QoQ. We attribute increase in Non-interest income to higher fx income (up 97xYoY/ 67%QoQ) of PkR2.7bn.

·        Operating expenses were recorded at PkR26.4bn, up 13%YoY/58%QoQ. This resulted in a cost-to-income ratio of 36.8%, compared with 28.0% and 23.1% in 3QCY24 and 2QCY25, respectively.

·        Credit-Allowance/Provisioning expense amounted to PkR255mn, compared to a expense of PkR2.6bn in 3QCY24 and an expense of PkR1.5bn in 2QCY25.

·        Effective tax rate for the quarter stood at 53.4% (vs. 55.3% in both 3QCY24/2QCY25).

·        We have a ‘Buy’ stance on MEBL with Jun’26 target price of PkR588.0/sh. Our liking for MEBL stems from: i) strong deposit growth, ii) High CASA ratio, and iii) impeccable asset and efficiency indicators.

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