Growth Remains Strong, Margins Tell a Different Story

Posted by: Aamir Hayat Like: 0 Post Date: April 20, 2026

Growth Remains Strong, Margins Tell a Different Story

Ticker: Meezan Bank Limited MEBL
Analyst Briefing Date: April 7, 2026

This article summarizes Meezan Bank Limited MEBL‘s corporate briefing, focusing on CY25 earnings performance, deposit and investment growth, and forward outlook on cost efficiency, regulatory changes, and interest rate expectations. It highlights the bank’s ability to sustain payouts despite income compression and evolving balance sheet dynamics.

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What did the management say?

Management indicated a deposit growth target of 20–25% for CY26, building on strong expansion in the current year. They expect the cost-to-income ratio to stabilise at around 35%, reflecting a normalisation of current efficiency levels. The bank continues to maintain a strong focus on individual and sole proprietor deposits, which account for 71% of the total base. They also highlighted potential regulatory changes related to the reclassification of the banking book to the trading book, which may reduce the capital adequacy ratio by 1–1.5%. Management intends to maintain sufficient capital buffers to manage this impact while supporting growth. Additionally, they believe the policy rate has bottomed out and expect a possible 1–2% increase in the upcoming Monetary Policy Committee decision.

What did the numbers say?

Meezan Bank reported consolidated EPS of PKR 50.16 for CY25, down 12% year on year, while total income declined 9% to PKR 294,035 million. Net mark-up income fell 12%, although non-mark-up income increased 18%, partially offsetting the decline. Profit before tax decreased 11% to PKR 200,299 million, and profit after taxation also declined 11% to PKR 92,178 million. Despite the earnings decline, the bank maintained its dividend at PKR 28 per share. Operating expenses increased 5%, leading to a cost-to-income ratio of 30% compared to 27% last year. Deposits grew 28% to PKR 3.3 trillion, while total investments increased 39% to PKR 2.6 trillion, with 73% allocated to variable rate instruments and 27% to fixed rate instruments.

What should investors expect going forward?

Investors should expect continued balance sheet growth driven by targeted deposit expansion of 20–25% and a strong retail deposit mix. The investment portfolio remains tilted toward variable rate instruments, which may influence income sensitivity depending on rate movements. Fixed rate exposure carries a weighted average yield of 11.5% with a duration of 1.6 years. Cost efficiency is expected to moderate, with the cost-to-income ratio stabilizing closer to 35%. Capital adequacy, currently at 19.2%, may face pressure from regulatory changes, although management plans to maintain buffers. Interest rate expectations of a potential 1–2% hike could shape future income trends, while dividend continuity will depend on earnings stability.

What are analysts saying about MEBL stock?

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According to the KSEStocks Database, MEBL is covered by 12 analysts in Pakistan and they have an average price rating of PKR 546. This average price target suggests an upside of 9.9% from the last close of PKR 497.11. According to EPS estimates from 17 different brokers, MEBL has an average 2026 EPS expectation of 48.7. This suggests the stock is now trading at a forward PE of 10.3.

Why do we compile research firms’ forecasts? Broker research is fragmented across different houses. Compiling it in one place helps investors see consensus, identify divergence, and think independently rather than relying on a single view.

⚠️ This post reflects the author’s personal opinion and is for informational purposes only. It does not constitute financial advice. Investing involves risk and should be done independently. Read full disclaimer →