The Board of Directors of Meezan Bank Limited in its meeting, held at Karachi on February 21, 2019 approved the audited unconsolidated financial statements of the Bank and its consolidated financial statements for the year ended on December 31, 2018. The meeting was presided by Mr. Riyadh S.A. A. Edrees – Chairman of the Board. By the Grace of Allah (SWT), Meezan Bank has continued its growth momentum and recorded commendable results for the year 2018. Profit after tax increased to Rs 8.96 billion compared to Rs 6.31 billion last year reflecting an impressive growth of 42%. EPS of the Bank, on enhanced capital, increased to Rs 7.67 per share from Rs 5.56 per share in 2017. The return on average equity increased to 23.77% as compared to 19.26% in 2017.
The Board has recommended the final cash dividend of Rs 2.00 per share (20 %) for the year 2018 bringing the total payout for the year to Rs 3.5 per share (35%) as Rupee 1.5 per share i.e. 15% interim cash dividend was paid alongwith issuance of 10% Bonus Shares during the year. The Bank has maintained its unbroken payout record since the date of listing on the Stock Exchange.
During the year, the Bank successfully issued Additional Tier I sukuk of Rs 7 billion that has further strengthened the Bank’s Capital Adequacy Ratio (“CAR”) and will support the future growth plans of the Bank. The Bank’s CAR now stands at a comfortable level of 14.55% – well above the minimum mandatory level of 11.90% for the year 2018.
The Bank’s net spread grew by 36% due to the Bank’s continued focus to increase volume of high yield earning assets portfolio and its re-pricing while simultaneously maintaining optimal cost of funds.
Financings of the Bank crossed Half a Trillion Rupee benchmark and closed at 513 billion, as compared to Rs 420 billion in 2017. Advance to Deposits Ratio (ADR) of the Bank grew to 65% from 63% in 2017. The Bank increased its financing exposure in all sectors while simultaneously maintaining asset quality and ensuring all the risk parameters are met. One of the lowest non-performing financing ratio in the Banking Industry of 1.34%, compared to an average of 8% for the Banking Industry as a whole is a testimony to the stringent risk acceptance parameters of the Bank. The Bank maintains a comfortable non-performing financings coverage ratio of 139%. With a diversified product base, the Bank is well positioned to cater to all financing needs of our customers in a Shariah compliant manner. Deposits of the Bank grew by a robust 18%, closing at Rs 785 billion from Rs 667 billion in 2017 as compared to average deposits of Banking Industry grew by 8%. The average current account deposits of your Bank grew by 24%. During the year, the Bank opened 59 new branches bringing its geographical network to 660 branches in 181 cities. The Bank maintained its position as the leading Islamic bank in Pakistan (amongst both Islamic as well as conventional banks) as well as the fastest growing Bank in the industry.
The fee and commission income of the Bank grew by 26% primarily due to increase in the trade business volume handled by the Bank which crossed a Trillion Rupee Landmark and grew by an impressive 43%. The increase in fee and commission income was also duly supported by a strong growth in debit card related fee and branch banking income.
Administrative and other operating expenses increased to Rs 19.7 billion from Rs 16.8 billion primarily due to rising inflation, rupee devaluation and increase in costs associated with new branches, however, the rise in expenses is sufficiently absorbed by the growth in the Bank’s income resulting in net improvement in income efficiency ratio by 4%.