Meezan Bank’s after-tax profit increased 8.7% to Rs981.9 million in the first quarter of 2013 compared to the corresponding three-month period of 2012, according to a notice sent to the Karachi Stock Exchange on Thursday. Earnings per share of the bank increased to Rs0.98 from Rs0.90 at the end of March 2012.
Speaking to The Express Tribune, a senior representative of Meezan Bank said he considered growth in the bank’s profit ‘above-average.’ “Compared to the performance of the rest of the banking sector in the first quarter of 2013, I would say our results have been fairly good,” he said.
Most banks that have announced their financial results for the first quarter have posted a drop in profitability mainly due to lower interest rates and rising deposit costs. For example, after-tax profits of Habib Bank, United Bank, Allied Bank, Bank Alfalah and Habib Metro have dropped in January-March quarter of 2013 compared to the corresponding quarter in 2012.
Revenues of the bank increased to Rs3.4 billion in the first quarter of 2013, reflecting a rise of 4.2% over the corresponding three-month period in 2012. The rise in the bank’s top-line was apparently due to a drop of 94.5% in provisions against non-performing Islamic financings and related assets, which dropped from Rs193.8 million in January-March 2012 to Rs10.5 million in January-March 2013. “This shows that the quality of our financing portfolio has improved of late,” the bank’s representative said.
Deposits of the bank grew from Rs176 billion at the end of March 2012 to Rs235 billion in the first quarter of 2013, reflecting an annual increase of 33.5%. However, on a quarter-on-quarter basis, the deposit base of the bank increased by only Rs5 billion, or 2.17%. Quarterly returns that Meezan Bank earned on financings, investments and placements increased from Rs5 billion in March 2012 to Rs5.5 billion in March 2013, showing a rise of 11.3%.
“The increase in profit has been achieved despite the monetary easing of 400 basis points by the State Bank of Pakistan (SBP) during the last 18 months. The bank’s share capital increased to Rs10 billion with the issuance of 11% bonus shares… accordingly, Meezan Bank has met the SBP’s minimum capital (requirement) of Rs10 billion a year in advance,” the bank said in a press statement.
The increase in Meezan Bank’s deposits and advances, which is higher than the industry-wide average in the first quarter, is in line with its past performance. For instance, deposits of Pakistan’s banking industry grew 13.8% in calendar year 2012. But Meezan Bank’s deposits increased about 35% in the same year. Similarly, advances increased at the rate of 10.4% for the entire banking sector in 2012, but Meezan Bank outperformed its competitors by posting a 26% increase in advances over the same period.
Published in The Express Tribune, May 3rd, 2013.
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