Earnings Report /
Pakistan

Meezan Bank: 1QCY22 Review – Strong base set for the year

  • MEBL has posted inline 1QCY22 NPAT of PKR9.2bn (EPS: PKR5.65), up 52%yoy, led by an uptick in net markup income

  • Earnings can accelerate across the next few quarters as April’s 250bps policy rate hike further pushes up margins

  • We expect ROE of more than 35% in 2022f. MEBL trades at a CY22f P/B of 2.0x and P/E of 6.3x. We retain our Buy stance

Raza Jafri
Raza Jafri

Executive Director, Research

Yusra Beg
Yusra Beg

Senior Investment Analyst

Intermarket Securities
25 April 2022

MEBL has posted 1QCY22 consolidated NPAT of PKR9.2bn (EPS: PKR5.65), up a strong 52%yoy and 8%qoq, with the uptick in net markup income a key feature. The result was inline with our projected EPS of PKR5.75, while the first interim DPS of PKR1.75 fell slightly short of our expectation of PKR2.0. 

Key result highlights of 1QCY22 include:

  • Net markup income of PKR21.5bn, up 43%yoy and 5%qoq. This can accelerate across the next few quarters as the impact of April’s 250bps hike in the policy rate feeds into asset re-pricing.

  • Non-markup income of PKR4.5bn, up 17%yoy and flat sequentially. The yoy increase has been driven by fee, in keeping with the trend depicted by other large banks.

  • Operating expenses of PKR10.6bn, up a swift 28%yoy, as MEBL continues to focus on growth. Due to strong revenue growth, the Cost/Income is a manageable 41%.

  • Total provisions of PKR0.2bn, down 20%yoy, with MEBL maintaining its superior asset quality.

MEBL’s margins are a key beneficiary of higher interest rates, which should allow it to offset operating cost pressures. This should push up ROE to above 35% in CY22f. MEBL trades at a CY22f P/B of 2.0x and P/E of 6.3x. Our Dec’22 TP is PKR175/sh and we have a Buy stance on the name.