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.