Meezan Bank Earnings Shatter Records in History

By Newztodays Team

Meezan Bank earnings have shattered records in history due to historical profits in 2023.

(MEBL) announced highest ever quarterly earnings of Rs26.4bn (EPS of Rs14.8) up 61% YoY and 4% QoQ in 4Q2023. The result came in line with our expectations.

This takes full year 2023 earnings to Rs84.5bn (EPS of Rs47.2) up 88% YoY, which is also the highest ever in the history of MEBL. Multi-billion Rupees Banks Scam Exposed

Alongside the result, the bank announced a final cash dividend of Rs8/share in 4Q2023, higher than analysts’ expectations of Rs5/share. In the full year 2023, the bank announced a total dividend of Rs20/share.

Net Spread Earned grew by 61% YoY and 12% QoQ to Rs72bn in 4Q2023, driven by rising asset yields and the growth of zero-cost current account deposits.

Other income of MEBL was up 71% YoY and 12% QoQ to Rs6.9bn in 4Q2023, primarily due to an increase in fee & commission income (+35% YoY to Rs5bn) and foreign exchange income of Rs979mn in 4Q2023.

Other expenses of the bank increased by 48% YoY and 7% QoQ to Rs20.9bn, driven by the growth of the branch network and inflationary pressures, we believe.

Despite the increase in other expenses, the cost-to-income ratio of the bank improved to 27% in 4Q2023 vs 29% in 4Q2022 and 28% in 3Q2023.

MEBL recorded a provision of Rs2.9bn, up 20% YoY and 274% QoQ in 4Q2023. This takes full year 2023 provision expense to Rs7.3bn, up 76% YoY.SBP imposes over Rs465m Penalties on Banks

The effective tax rate of the bank remained on the higher side at 52% in 4Q2023 compared to 49% in 4Q2022 and 3Q2023. The higher tax expense is primarily due to the implementation of a 40% windfall levy tax on FX income for the years 2021 and 2022,” Topline Pakistan Research said.

MEBL remains our preferred pick in the banking sector. The stock is currently trading at an attractive PE of 3.5x, PBV of 1.4x, ROE of 44%, and dividend yield of 12% based on expected 2024 earnings and book value.