Islamic Finance

Meezan Bank posts Rs4.1 billion profit after tax for second quarter of 2019

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.

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