Snippets from MEBL Q1 CY24 earnings call
MEBL Highlights and Future Outlook
Meezan Bank Limited (MEBL) held its conference call to discuss its first-quarter results for CY24 and outline its future outlook.
- Earnings Per Share (EPS) Surge: MEBL reported an unconsolidated EPS of PKR 14.2, marking a significant 65% year-over-year (YoY) increase. Alongside this, the bank announced an interim cash dividend of PKR 7.0 per share.
- Strong Growth in Spread Earned: The bank’s spread earned increased by 65% YoY to PKR 67.6 billion in Q1CY24, driving a 45% YoY surge in profits to PKR 119.2 billion. This growth was attributed to higher underlying policy rates and increased volume of earning assets.
- Non-Funded Income Growth: Non-funded income grew by 64% YoY to PKR 6.4 billion, mainly fueled by fee & commission income and the absence of forex and capital losses.
- Debit Card Expansion: MEBL added over 240,000 debit cards in Q1CY24, bringing the total portfolio to 3.4 million. Debit card spending increased by 43% YoY to PKR 71 billion during the quarter.
- Improvement in Foreign Exchange Income: The bank earned PKR 478 million in foreign exchange income in Q1CY24, a significant improvement from a loss of PKR 155 million in Q1CY23.
- Operational Expenses: Operating expenses rose to PKR 21.2 billion in Q1CY24, up 42% YoY, driven by inflationary pressures and IT-related expenses.
- Investment Portfolio Growth: MEBL’s investment portfolio expanded to PKR 1.6 trillion due to regular Sukuk auctions, easing liquidity concerns for Islamic banks.
- Asset Quality and Capital Adequacy: Despite a decline in Advances-to-Deposits Ratio (ADR) to 41%, MEBL’s Capital Adequacy Ratio (CAR) reached an all-time high of 24.1% in Mar-24, well above regulatory requirements.
Financial Highlights and Ratios
Key Financial Ratios
| Ratio | CY21A | CY22A | CY23A | CY24E | CY25F | CY26F |
|---|---|---|---|---|---|---|
| EPS | 17.4 | 25.1 | 47.2 | 54.2 | 47.2 | 46.2 |
| EPS Growth | 11.2% | 44.2% | 87.7% | 14.9% | -12.9% | -2.1% |
| DPS | 5.6 | 8.2 | 20.0 | 26.8 | 27.5 | 27.8 |
| BVPS | 48.3 | 64.4 | 103.2 | 129.1 | 149.3 | 167.5 |
| PER | 12.6 | 8.7 | 4.7 | 4.1 | 4.6 | 4.8 |
| Dividend Yield | 2.6% | 3.7% | 9.1% | 12.2% | 12.5% | 12.6% |
| P/B | 4.5 | 3.4 | 2.1 | 1.7 | 1.5 | 1.3 |
| ROE | 38.8% | 45.4% | 58.3% | 49.3% | 35.6% | 30.5% |
Income Statement (PKR Million)
| Item | CY21A | CY22A | CY23A | CY24E | CY25F | CY26F |
|---|---|---|---|---|---|---|
| Mark-up/interest earned | 110,073 | 232,121 | 431,722 | 459,415 | 421,150 | 412,390 |
| Mark-up/interest expensed | 41,151 | 110,418 | 205,293 | 208,170 | 173,230 | 142,749 |
| Net interest income | 68,921 | 121,704 | 226,429 | 251,245 | 247,920 | 269,641 |
| Non-interest income | 14,892 | 19,103 | 22,107 | 28,189 | 30,179 | 31,617 |
| Provision charged | 993 | 4,177 | 7,340 | 2,801 | 3,665 | 4,617 |
| Operating expenses | 35,324 | 48,245 | 71,788 | 90,785 | 100,897 | 113,780 |
| Profit/loss to shareholders | 28,355 | 45,007 | 84,476 | 97,046 | 84,548 | 82,742 |
Investment Thesis and Outlook
Akseer Research maintains a ‘Neutral’ recommendation on Meezan Bank Limited (MEBL) with a price target of PKR 196 per share by December 2024, offering a potential downside of 11% while providing a dividend yield of 12%. The investment case for MEBL is supported by the normalization of deposit growth and an anticipated decline in interest rates.
Disclaimer
The information in this article is based on research by Akseer Research. All efforts have been made to ensure the data represented in this article is as per the research report. This report should not be considered investment advice. Readers are encouraged to consult a qualified financial advisor before making any investment decisions.
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