Sharp decline in provisioning charges lifts MEBLs profitability by 24% YoY

April 20, 2021 (MLN): Meezan Bank Limited (MEBL) has witnessed a 24% YoY increase in net profits to Rs6.12bn (EPS: Rs4.28/sh) during 1QCY21, compared to the profits of Rs4.94bn (EPS: Rs3.55/sh) in the corresponding quarter last year.

Alongside results, the bank announced a cash dividend of Rs1.5/share for the quarter mentioned above.

The upsurge in MEBL’s profitability was largely due to Rs284mn of provision charges which were 82.8% lower than the provision of Rs1.63bn in 1QCY20.

During the quarter, Profit earned on deposits and profits earned on Islamic financing and related assets both declined by 39.3% YoY and 19% YoY respectively, as a result, the net spread earned by the bank increased by a mere 2.3 % YoY.

Non-markup income has reported a strong 11% YoY growth. Under the non-markup head, the fee income of the bank surged by 50.5% YoY on the back of normalization of branch operations post lockdown. The dividend income and Other income segments have also grown by 15.5% and 86% YoY respectively, while income from foreign exchange operations dipped by 14% YoY.

On the expense side, due to the branch expansion strategy, the other expenses of the bank jumped by 15% YoY. Operating expenses were up by 16% YoY to Rs7.99bn. Therefore, despite strong revenues, the Cost to Income ratio of the bank has risen to 42% vs. 38% in the same period of last year.

MEBL has reported a loss from associates of Rs48mn in 1QCY21, vs. Rs907mn loss in the same quarter last year, on account of its subsidiary Al Meezan Investments, a report by Intermarket Securities said.

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