Meezan Bank Limited (MEBL) announced its 1HCY22 results today where the bank reported consolidated NPAT of PkR17.1bn (EPS: PkR10.5) compared to PkR12.7bn (EPS: PkR7.8) in the same period last year. The result came in above our expectations on account of higher than anticipated non funded income. Along with the result, MEBL announced a DPS of PkR1.75 and a bonus of 10%.

· Bank’s core income increased by 46%YoY during the period under review. The growth can be explained by robust book growth as well as better asset pricing.

· The non core income grew by 47%YoY during the same period to PkR11.1bn owing to phenomenal growth in FX income. Other notable contribution came from Fee Income which increased to PkR6.8bn (up 40%YoY).

· Bank recorded provisioning cost of PkR961mn which contained the profitability growth somewhat. This took the total provisioning cost during 1HCY22 to PkR1.2bn (up 2.7x).

· Administrative expenses grew by 25.8%YoY during 1HCY22 which took the bank’s cost-to-income ratio during the period to 40% as opposed to 45% it clocked during SPLY.

· Effective taxation during the quarter clocked in at 57.5% which took the effective taxation during 1HCY22 to 49.3%. The effective taxation was lower than our estimate and was the key reason behind the earnings surprise.

· We have a Buy rating on the stock with a TP of PkR150/sh and offers an upside of 17% on the last close .

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