Meezan Bank Limited (PSX: MEBL) posted a consolidated profit after tax of Rs22.42 billion for the first quarter ending March 31, 2025, marking a 10.61% year-on-year decline compared to Rs25.08 billion in the same period last year. The bank declared an interim cash dividend of Rs7 per share (70%), in line with market expectations.
The decline in earnings was primarily driven by an 8.13% drop in net profit/return, which fell to Rs61.78 billion from Rs67.25 billion in Q1 2024. Profit earned from Islamic financing and related assets decreased by 9.72% to Rs107.62 billion, while returns on deposits and other dues declined by 11.73% to Rs45.86 billion. Analysts attributed the contraction to lower interest rates and the impact of the Minimum Deposit Rate (MDR) on individual portfolios.
However, the bank saw a 32.7% surge in total other income, reaching Rs9.24 billion, supported by a 234% jump in foreign exchange income (Rs1.60 billion) and a 21.93% rise in fee and commission income (Rs7.21 billion). In contrast, dividend income plummeted by 68.72% to Rs57.14 million, and gains on securities dropped sharply by 81.42% to Rs11.17 million.
Operating expenses decreased by 6.81% to Rs19.17 billion, while other charges fell drastically by 93.39%. The bank recorded a provision expense of Rs1.85 billion, significantly higher than the Rs263 million recorded in Q1 2024. Profit before taxation stood at Rs49.27 billion, down 6.1% YoY, with an effective tax rate of 55%.
On the balance sheet front, deposits grew by 11% quarter-on-quarter to Rs2.97 trillion, while investments rose by 10% to Rs2.1 trillion. However, advances declined by 8% to Rs1.4 trillion. The bank’s earnings per share (EPS) for the quarter stood at Rs12.32, down 11.56% YoY.
Despite the profit dip, Meezan Bank remains a key player in Pakistan’s Islamic banking sector, with analysts highlighting its strong fee-based income and forex gains as positive indicators. The stock currently trades at a 2025 price-to-earnings (P/E) ratio of 6.5x, with a dividend yield of 11%.
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