Meezan Bank Q1 2025 Earnings: Profit Dips 11% but Dividend Announced

Meezan Bank (PSX: MEBL), Pakistan’s largest Islamic bank, has reported a profit after tax (PAT) of PKR 22 billion for the first quarter of 2025 (Q1 CY25). However, earnings declined by 11% compared to last year, mainly due to lower interest income and higher expenses.

Despite the drop, the bank announced a cash dividend of PKR 7 per share, offering some relief to shareholders. Let’s break down the key financial results, reasons behind the decline, and what this means for investors.

Key Highlights of Meezan Bank’s Q1 2025 Performance

Meezan Bank’s financial report shows a mix of challenges and strengths. The bank faced lower profits due to a dip in its main income source and higher operating costs. However, it also saw growth in other income areas, like fees and foreign exchange. Here’s a quick overview:

• Profit After Tax (PAT): Rs22 billion, down 11% from Rs25 billion in Q1 2024.
• Earnings Per Share (EPS): Rs12.32, a 11.6% drop from Rs13.93 last year.
• Dividend: Rs7 per share, signaling strong shareholder support.
• Net Profit/Return: Rs61.78 billion, an 8% decrease year-on-year.
• Other Income: Jumped 33% to Rs9.24 billion, driven by fees and forex gains.

Meezan Bank Q1 2025 vs. Q1 2024: Comparisons

Why Did Meezan Bank’s Profit Decline?

The bank’s profit took a hit due to two main reasons: lower net interest income (NII) and higher operating expenses (OPEX). Let’s look at each:

Drop in Net Interest Income

Meezan Bank earns money by charging profit on Islamic financing, investments, and placements. In Q1 2025, this income fell by 9.7% to Rs107.62 billion from Rs119.2 billion last year. At the same time, the cost of paying profit on deposits dropped by 11.7% to Rs45.86 billion. However, the overall net profit/return still decreased by 8% to Rs61.78 billion. This was partly due to lower interest rates and new rules on minimum deposit rates for individual accounts.

Rising Operating Expenses

The bank’s operating expenses, which include costs like salaries and branch maintenance, increased by 8% compared to the last quarter, reaching Rs20.2 billion. However, these costs were 7% lower than Q1 2024, showing some cost control. The bank’s cost-to-income ratio improved slightly to 28.5% from 29.5% last year, meaning it’s managing expenses better relative to its income.

Higher Taxes & Provisions

• Tax rate increased to 54.5% (vs. 52.2% last year).
• Provisioning charges surged (PKR 1.8bn vs. PKR 263mn).

Balance Sheet Growth

Meezan Bank’s balance sheet showed solid growth in some areas:

• Deposits: Grew by 11% to Rs2.9 trillion.
• Investments: Increased by 10% to Rs2.1 trillion.
• Advances: Dropped by 8% to Rs1.4 trillion.

This growth in deposits and investments shows customer trust in the bank, even as lending (advances) slowed down.

Future Outlook for Meezan Bank

Meezan Bank’s performance in Q1 2025 reflects the broader economic challenges facing the banking sector, including reduced returns on financing and increased provisioning requirements. However, the growth in non-funded income streams like fee and foreign exchange income indicates potential areas for revenue diversification. The declared dividend of Rs7 per share demonstrates the bank’s commitment to shareholder returns despite profit pressures.​

✅ Positive Signs:

• Strong non-funded income growth (fees, forex).
• Dividend payout shows confidence in liquidity.

⚠️ Challenges Ahead:

• High tax burden may continue affecting profits.
• Lower interest margins if rate cuts happen.

FAQs About Meezan Bank Q1 2025 Earnings