Meezan Bank (MEBL) announced its financial results for the first quarter of 2025, reporting earnings of Rs. 22 billion, translating to an earnings per share (EPS) of Rs. 12.3. This represents a 12 percent decline year-on-year and an 8 percent drop quarter-on-quarter. The results were in line with industry expectations, according to Topline Securities.

Alongside the earnings announcement, Meezan Bank declared its first interim cash dividend of Rs. 7.0 per share for 1Q2025, also meeting market expectations.

The bank’s net spread fell by 8 percent year-on-year and 15 percent quarter-on-quarter to Rs. 62 billion. This decline was attributed to lower interest rates and the introduction of the Minimum Deposit Rate (MDR) on the individual portfolio.

Provision expenses increased significantly to Rs. 1.85 billion in 1Q2025, compared to Rs. 263 million in the same quarter last year and Rs. 7.3 billion in the previous quarter.

On a positive note, other income rose 29 percent year-on-year to Rs. 8.2 billion, driven by a 10 percent increase in fees and commission income to Rs. 5.5 billion and a 3.3-fold surge in foreign exchange income to Rs. 1.6 billion.

Other expenses decreased by 7 percent year-on-year but rose 9 percent quarter-on-quarter to Rs. 19.6 billion, influenced by the bank’s expanding branch network and inflationary pressures.

The effective tax rate stood at 55 percent in 1Q2025, compared to 52 percent in 1Q2024 and 58 percent in 4Q2024.

On the balance sheet, deposits grew 11 percent quarter-on-quarter to Rs. 2.97 trillion, investments increased by 10 percent to Rs. 2.1 trillion, while advances declined 8 percent to Rs. 1.4 trillion.

Meezan Bank remains a preferred pick in the banking sector, currently trading at a 2025 estimated price-to-earnings (PE) ratio of 6.5x and a price-to-book value (PBV) of 1.7x, with an attractive dividend yield of 11 percent.