Meezan Bank (MEBL) has announced its 102026 financial results, reporting unconsolidated profit of Rs. 23.4 billion, translating into earnings per share of Rs. 13.0. The result reflects an increase of 6 percent year-on-year (YoY) and 7 percent quarter-on-quarter (QoQ), exceeding market expectations mainly due to stronger-than-anticipated non-operating income.

Net spread declined slightly by 1 percent YoY and 4 percent QoQ to Rs. 61.4 billion during 102026. The contraction is largely attributed to a 50bps reduction in policy rates in December 2025, which impacted overall spreads.

Non-markup income posted strong growth, rising 36 percent YoY to Rs. 11.1 billion in 1QFY26. This was supported by a 26 percent YoY increase in fee and commission income along with a sharp 58 percent YoY jump in dividend income. FX income also improved, reaching Rs. 1.8 billion, up 13 percent YoY.

On the cost side, operating expenses increased by 18 percent YoY but declined 4 percent QoQ to Rs. 23.2 billion in 102026. As a result, the cost-to-income ratio stood at 31.9 percent, compared to 28.1 percent in 102025 and 33.8 percent in 4Q2025.

Provisioning charges came in at Rs. 449 million, down 76 percent YoY but higher by 78 percent QoQ. The effective tax rate was recorded at 52.21 percent in 102026, compared to 54.52 percent in 102025 and 53.38 percent in 4Q2025.

On the balance sheet front, deposits increased 10 percent QoQ to Rs. 3.6 trillion, investments rose 3 percent QoQ to Rs. 2.7 trillion, while advances declined 9 percent QoQ to Rs. 1.5 trillion.

The bank also announced an interim cash dividend of Rs. 7.5 per share for 102026, above expectations of Rs. 7.0 per share.

Overall, MEBL continues to remain a preferred pick in the banking sector. The stock is currently trading at a 2026E price-to-earnings multiple of 9.7x and price-to-book value of 2.6x, offering a dividend yield of around 6 percent.