Meezan Bank Limited (PSX: MEBL), Pakistan’s largest Islamic bank, has announced its financial performance for the half year ended June 30, 2025, reporting a notable decline in earnings compared to the same period last year. The bank posted a profit after tax of Rs47.14 billion, down 9.66% from Rs52.12 billion recorded in the first half of 2024, as weaker returns from financing and investments impacted overall income.
The bank’s earnings per share fell to Rs25.97 from Rs28.92 a year earlier, marking a year-on-year decrease of 10.2%. Alongside the results, the board approved a cash dividend of Rs7 per share for the half year, continuing its policy of regular shareholder payouts.
A significant factor behind the decline was the 16.1% drop in profit/return earned on Islamic financing, investments, and placements, which fell to Rs209.54 billion from Rs249.68 billion in the previous year. On the expense side, profit/return on deposits and other dues also declined by 25.3% to Rs83.79 billion, bringing net profit/return to Rs125.74 billion, a decrease of 8.6% year-on-year.
Despite the slowdown in financing returns, some income streams saw positive momentum. Fee and commission income rose sharply by 23.8% to Rs14.02 billion, supported by increased banking activity and service-related revenue. Foreign exchange income saw a significant surge to Rs3.24 billion, reflecting a remarkable 459.2% growth, possibly due to favorable currency movements and higher transaction volumes.
However, not all non-core income categories performed as strongly. Gain on securities fell by 34.9% to Rs669 million, while dividend income dropped steeply by 73.6% to Rs173 million. On the other hand, other income rose by 32.3% to Rs804 million, bringing total other income to Rs18.91 billion, up 33.2% from last year.
Total income for the period came in at Rs144.65 billion, reflecting a 4.6% decline from the Rs151.70 billion reported in the first half of 2024. Operating expenses provided some relief, falling by 16.5% to Rs35.38 billion, aided by cost control measures and operational efficiency gains. Workers Welfare Fund expenses edged down 1.6% to Rs2.22 billion, and other charges dropped by more than half to Rs62.88 million.
Before accounting for credit loss allowances, profit stood at Rs107.70 billion, showing marginal growth of 0.9% over the previous year. Credit loss allowances amounted to Rs3.37 billion, compared to a net reversal of Rs672 million last year. This brought profit before taxation to Rs104.33 billion, a 2.9% decline from Rs107.40 billion in 1HF24.
Taxation costs rose by 3.4% to Rs57.19 billion, further pressuring net results. The combined impact of reduced financing returns, lower gains on securities, and higher taxes resulted in the near 10% drop in profit after tax.
Meezan Bank’s performance reflects the broader challenges faced by Pakistan’s banking sector in navigating changing interest rate environments, market volatility, and evolving customer demands. However, the resilience in fee-based income and the substantial growth in foreign exchange earnings demonstrate the bank’s ability to diversify revenue sources and adapt to shifting market dynamics.
With a strong capital base, a focus on Shariah-compliant banking, and continued investment in digital banking solutions, Meezan Bank remains positioned to capture growth opportunities, despite near-term pressures on profitability.