Driven by higher income from core banking operations, Meezan Bank Ltd, the countrys leading Islamic bank, posted a healthy jump in the first quarter net profits.
The massive growth in investment and financing portfolio compensated the bank with a 37 percent year-on-year growth in the top-line.
The banks investment portfolio, which had jumped by 136 percent in 2010, expanded further by 27 percent to around Rs70 billion in the first three months of CY11. Meezans investment-to-deposit ratio, therefore, rose by nearly 10 percentage points to 52 percent in the quarter ending March.
However, the financing portfolio fell by 6.6 percent (quarter-on-quarter) to around Rs51 billion in the first three months of 2011, but it is still 21 percent higher than the financing portfolio at the end of December 2009. The slight decline in the financing portfolio reflects seasonal financing repayments and growing conservativeness on the part of the banking industry to avoid risky assets.
Lucrative return on Sukuk bonds, which offer profit rates close to the 6-month T-bill weighted average yield, and increase in Statutory Liquidity Ratio for Islamic banks are the two major factors behind growing interest in investments. SLR, which was increased by 5 percentage points to 14 percent last month, has risen by additional 5 percentage points to 19 percent next month.
The banks deposit base, which had surged by 31 percent to Rs131 billion in 2010, grew slightly to Rs134.8 billion in the first three months. The banks CASA ratio remained unchanged at 66 percent.
The good part is that the banks total NPLs remained constant in the first three month of 2011.
As the lender made more precautionary provisions, its coverage ratio fell by 6 percentage points to 95 percent in the first three months. Yet at the same time, the decline in total gross advances slightly increased the banks infection ratio to 7.9 percent from 7.4 percent.
Other income increased by 49 percent to Rs650 million as against Rs435 million in the same quarter a year earlier, on the back of growth in income from investment banking activities, equity investments and capital gain on sale of securities.
With the bank aggressiveness in expanding its reach, administrative expenses grew by 26 percent year-on-year. The bank, which owns the largest Islamic bank branch-network in Pakistan, added around 21 new branches last year to expand total network to 222 branches.
Since a considerable proportion of the population is unbanked, increasing awareness of and demand for Sharia-compliant products suggest a bright future for the Islamic banking industry in Pakistan.
=========================================================
Meezan Bank Ltd 1QCY11 1QCY10 Chg
=========================================================
Rs(mn)
---------------------------------------------------------
Return earned 3,960 2,891 37%
Return expensed 2,034 1,441 41%
Net spread earned 1,926 1,450 33%
Provisioning 304 220 38%
Net spread after provisions 1,622 1,230 32%
Other income 650 435 49%
Operating revenues 2,576 1,885 37%
Other expenses 1,371 1,090 26%
Profit before taxation 901 575 57%
Profit after taxation 586 364 61%
EPS (Rs) 0.73 0.45
=========================================================
Source: Company Accounts
Comments
Comments are closed.