MEBL_1QCY23 Result Review, (AKD Off the Analyst's Desk Apr 19, 2023)
Meezan Bank Limited (MEBL) announced its 1QCY23 result earlier today, wherein the bank posted unconsolidated NPAT of PkR15.4bn (EPS: PkR8.6)—lower than our expectations. The 1QCY23 earnings were lower by 6%QoQ while higher by 68%YoY.
- Net Spread Earned for the quarter was recorded at PkR41.0bn, lower by 8%QoQ while higher by 91%YoY. As expected, Profit expensed increased by 21%QoQ, as the policy rates increased. However, contrary to our expectations, the growth in Profit earned during the quarter was lower than expected, growing at just 5%.
- Consequently, we anticipate earnings spreads at MEBL may have contracted during the quarter, to ~7% from 8% in the previous quarter; despite the increase in interest rates. This was likely driven by profit rates on Sukuks being repriced later in the quarter and those on deposits being repriced earlier in the quarter. Hence, it is likely that Earnings Spreads expansion is witnessed in the Jun’23 quarter.
- In terms of other income, the bank witnessed a QoQ dip of 5%, majorly driven by a 3%QoQ dip in Fee and commission income generated during the period. This was further aided by the 38% reduction in the foreign exchange losses during the quarter.
- Some respite for the quarter came in the form of slightly lower provisioning charges for the quarter, clocking in at PkR2.1bn in 1QCY23, 13% lower than the earlier quarter.
- Earnings during the quarter were also buoyed by lower rate of taxation, wherein the effective tax rate clocked in at 44.6% in 1QCY23 vs. 48.7% in 4QCY22.
- Alongside the earnings, the bank announced a cash dividend of PkR3/sh, corresponding to a payout ratio of 35% for the first quarter.
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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