Meezan Bank Breaks All-Time Record for Profit in 2024

Meezan Bank (MEBL) announced its calendar year 2024 results today, whereby the bank’s earnings surged to Rs. 101.5 billion (EPS Rs. 56.5) up 20 percent YoY. However in 4Q2024, the bank recorded earnings of Rs. 23.9 billion (EPS of Rs. 13.36), which is down 9 percent YoY and down 7 percent QoQ. According to Arif Habib Limited, this is the highest-ever annual profit posted by the bank, likely emerging as the most profitable bank in the sector. Alongside this record performance, the bank announced an unprecedented dividend payout of Rs. 28/share. Alongside the result, the bank also announced a fourth interim cash dividend of Rs. 7.0/share in 4Q2024, taking the 2024 dividend to Rs. 28.0/share. MEBL recorded a provision of Rs. 7.3 billion in 4Q2024 as compared to an expense of Rs. 2.5 billion in 3Q2024 and provision expense of Rs. 2.9 billion in 4Q2023. The higher provision expense in 4Q2024 is due to the implementation of IFRS-9. The effective tax rate of banks clocked in at 58 percent in 4Q2024 and 54 percent in 2024. Net spread earned of MEBL grew by 1 percent YoY and was down 6 percent QoQ to Rs. 72 billion in 4Q2024. This slight YoY growth in the net spread was led by higher asset yields, a favorable asset repricing gap, and growth in zero-cost current account deposits. Other income of the bank declined by 7 percent YoY and up 4 percent QoQ in 4Q2024. Other expenses of the bank increased by 22 percent QoQ and 14 percent YoY to Rs. 18 billion in 4Q2024, driven by the expanding branch network and the impact of inflation. MEBL remains our preferred pick in the banking sector. The stock currently trades at a 2025E PE of 5.6x and PBV of 1.5x with a dividend yield of 10.1 percent.