Meezan Bank (MEBL), Pakistan’s first and the largest Islamic bank has announced second quarter results. The Bank has posted profit after tax of Rs4.1 billion (EPS: Rs3.2), up 88%YoY on the back of increase in net spread earned; up by 77%YoY. MEBL also announced interim cash dividend of Rs1.0/share. Cumulative earnings for 1H2019 of the Bank rose to Rs5.4 per share; up by hefty 69% as compared to Rs3.2 for the corresponding period last year. The significant rise in net spread earned can be attributed to the non-applicability of Minimum Deposit Rate (MDR) on Islamic banks which has resulted in higher sensitivity of income to the tightening monetary policy. Other income grew by 21%YoY to Rs2.5 billion, wherein fee and commission income and foreign income grew by 34%YoY and 57%YoY, respectively. Other expenses during the outgoing quarter were up 27%YoY to Rs6.1 billion. This was on the back of 26% increase in operating expenses. Effective tax rate of the Bank declined to 40%, from 43% in the same period last year. The key risks facing the Bank include: 1) deterioration in Pakistan macros, 2) uptick in provisioning charge and 3) lack of investment avenues.