Corporate results: Meezan Bank profit up 9.9% to Rs5 billion

Net spread after provisions rise to Rs17.6 billion

KARACHI: Meezan Bank posted earnings of Rs5 billion for 2015, up 9.9% from the profit of Rs4.5 billion in the preceding year.

With the earnings per share of Rs5.01, Meezan Bank also announced through a stock notice on Monday a cash dividend of Rs1.25 per share that is in addition to the interim dividend already paid at Rs1.75 per share.

The increase in the bank’s profitability originated from the widening of its net spread after provisions. The Shariah-compliant term for net interest income, net spread after provisions stood at Rs17.6 billion, up 36.8% from a year ago.

The expansion in its spread was mainly on the back of a significant increase in the profit earned on Islamic financing, investments and placements. It rose almost 15% year-on-year (YoY) to Rs33.1 billion at the end of 2015.

In contrast, other income of Meezan Bank registered a YoY decline in 2015, hurting its bottom line. It amounted to Rs4.6 billion, down 3.3% from a year ago. The major reason for the decrease in other income was the drop of 70.2% in the net gain on sale of securities in 2015.

In addition, the bank’s income from dealing in foreign currencies also decreased 9.5% to Rs1.4 billion.

Speaking to The Express Tribune, Taurus Securities Head of Research Zeeshan Afzal said the bank’s net profit for 2015 is largely in line with market expectations.

Growth in earnings could be better, Afzal added, had it not been for its relatively high administrative expenses, especially in the last quarter. Administrative expenses clocked up at Rs13.5 billion, up 29.6% from a year ago.

After increasing by 47.2% over the preceding year, Meezan Bank’s tax expense in 2015 amounted to Rs3.4 billion. The effective tax rate for Meezan Bank remained 40.5% last year as opposed to 33.7% in 2014 because of changes in the tax structure of banks.

As many as 8,000 shares of Meezan Bank were traded on Monday, with the stock losing 2.6% during the day to close at Rs42 per share.

Published in The Express Tribune, February 23^rd,  2016.

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