- Meezan Bank (MEBL) announced its 2Q2024 result today. The bank recorded its highest-ever quarterly earnings of Rs26.7bn (EPS of Rs14.88), up 55% year over year and 5% quarter over quarter. The result was in line with industry expectations.
- This takes 1H2024 earnings to Rs51.8bn (EPS Rs28.9), up 59% YoY.
- Alongside the result, the bank also announced a second interim cash dividend of Rs7.0/share in 2Q2024, taking the 1H2024 dividend to Rs14.0/share.
- This strong profitability was led by growth in net spread earned, which grew by 42% YoY and 4% QoQ to Rs70bn in 2Q2024. A rise led to this growth in the net spread in asset yields and in zero-cost current account deposits.
- MEBL recorded a provision reversal of Rs935mn in 2Q2024 compared to a provision expense of Rs1.5bn in 2Q2023.
- Other bank income grew by 4% YoY while down by 16% QoQ in 2Q2024.
- The bank’s other expenses increased by 35% YoY and 4% QoQ to Rs21.2bn, which was driven by the growing branch network and inflationary pressures, we believe.
- Despite an increase in other expenses, the bank’s cost-to-income ratio improved to 29% in 2Q2024, as against 30% recorded in 2Q2023.
- The bank’s effective tax rate was 51% in 2Q2024, compared to 53% in 2Q2023 and 52% in 1Q2024.
- MEBL remains our preferred pick in the banking sector. The stock currently trades at a 2024E PE of 4.2x, PBV of 1.8x, and a dividend yield of 12%.
