Meezan Bank (MEBL) announced its 1Q2026 result today, where the bank recorded unconsolidated earnings of Rs. 23.4 billion (earnings per share of Rs. 13.0), up by 6 percent year-on-year (YoY) and 7 percent quarter-on-quarter (QoQ)
The high profit was due to stronger-than-expected non-operating income, according to Topline Securities.
Net spread slightly declined by 1 percent YoY and 4 percent QoQ to Rs. 61.4 billion in 102026. This decrease in spread is attributable to a 50bps decline in interest rates in December 2025.
Non-operating income surged by 36 percent YoY to Rs. 11.1 billion in 1QFY26, driven by 26 percent YoY growth in fee and commission income and a 58 percent YoY increase in dividend income. The bank also reported foreign exchange (FX) income of Rs. 1.8 billion, up 13 percent YoY.
Operating expenses increased by 18 percent YoY, while declining 4 percent QoQ to Rs. 23.2 billion in 1Q2026. Similarly, the cost-to-income ratio stood at 31.9 percent in 102026, compared to 28.1 percent in 102025 and 33.8 percent in 4Q2025.
MEBL recorded a provision expense of Rs. 449 million in 102026, down 76 percent YoY and up 78 percent QoQ. The effective tax rate of the bank stood at 52.21 percent in 102026, compared to 54.52 percent in 1Q2025 and 53.38 percent in 4Q2025.
On the balance sheet side, deposits grew by 10 percent QoQ to Rs. 3.6 trillion, investments increased by 3 percent QoQ to Rs. 2.7 trillion, while advances declined by 9 percent QoQ to Rs. 1.5 trillion in 1Q2026.
Alongside the results, the bank also announced an interim cash dividend of Rs. 7.5 per share in 1Q2026, higher than our expectation of Rs. 7 per share.
MEBL remains Topline’s preferred pick in the banking sector. The stock currently trades at a 2026E price-to-earnings (P/E) ratio of 9.7x and price-to-book value (P/BV) of 2.6x, with a dividend yield of 6 percent.
