Meezan Bank LimitedUnlocking the True Potential of Islamic Banking

ANALYST BRIEFING –

JUNE 2019

August 29, 2019

2

I. Tilawat e Quran 4:00 pm – 4:05 pm

II.Presentation by CFO and Group

Head Finance – Mr Shabbir Hamza

Khandwala

4:05 pm – 4:20 pm

III. Q & A Session4:20 pm – 5:00 pm

III. Hi - Tea 5:00 pm onwards

Analyst Briefing – August 29, 2019: Schedule of the Event

3Meezan Bank: Performance At a Glance – Profit After Tax Grew by 70%

• PAT HY19: Rs 7.0 bn ($ 43.7 mn) vs Rs 4.13 bn ($ 25.7 mn) – a growth of 70% (Rs 3 bn);

• EPS - Rs 5.44 vs Rs 3.21 in HY18 – on enhanced share capital of Rs 12.861 bn;

• Return on Average Equity – 33.7% vs 22.9% in HY18;

• Return on Average Assets – 1.45% vs 1.0% in HY18;

• Net spread : Rs 21 bn vs Rs 12 bn in HY18 due to higher volume of earning assets & increase in asset

yield due to higher underlying Target Rate;

• Fee , commission and other income increased to Rs 3.4 bn vs Rs 2.7 bn in HY18– a growth of 26%;

• Trade Business Volume crossed half a trillion to Rs 534 billion vs Rs 471 bn in HY18 – a growth of 13%;

• Operating and other expenses - Rs 11.7 bn vs Rs 9.3 bn in HY18 (26% up from HY18) mainly due to

inflation, rupee devaluation, and opening of 76 new branches;

• Income efficiency ratio: 46% vs 57% in CY18 – significantly improved by 11%;

• No of Branches: Opened 76 new branches reaching 678 vs 602 in HY18 (189 cities vs 160 cities).

4Meezan Bank: Performance At a Glance – Total Assets Crossed Rs 1 Trillion – 1st Time in History of Bank

• Total Assets of the Bank crossed Rs 1 trillion first time in the history of the Bank vs Rs 938 bn in CY18 – a

major milestone achieved ;

• Investments have increased by 75% to Rs 217 bn vs Rs 124 bn in CY18 after purchase of Govt

Guaranteed Energy Sukuk of Rs 85 bn;

• Financing Rs 484 bn vs Rs 513 bn in CY8 due to seasonal repayments;

• NPL infection ratio stood at 1.6% vs banking industry average of 8%;

• NPL Coverage ratio 130% vs banking industry average of 84%;

• Bank’s Deposits grew to Rs 842 bn vs Rs 785 bn last year – a growth of 7%;

• Market share of deposits grew to 5.8% in HY19 vs 5.3% in HY18 – a gain of 0.5%;

• Average Current account deposits grew by 14% from HY18;

• Capital Adequacy Ratio (CAR) increased to 16.22% vs 14.55% in CY18 – minimum CAR Dec’19: 12.50%;

• Equity grew by 8% to Rs 44 bn vs Rs 40 bn in CY18;

• Cash dividend of 10% for Q2 bringing the total payout for HY19 to 30% (20% cash & 10% bonus shares)

vs 25% (15% cash & 10% bonus shares) in HY18;

Profit & Loss Account HY19 HY18Growth

%

Net spread earned 20,751 12,402 67%

Fee and commission and other income 3,418 2,712 26%

Foreign exchange income 1,074 791 36%

Dividend income and capital loss (HY19: Rs 141 mn) (33) 375 (109%)

Operating income 25,210 16,280 55%

Operating expenses and other charges (11,721) (9,334) 26%

Profit before provisions 13,489 6,946 94%

Provision against NPLs - (net) (583) (113) 416%

Provision against investments and others (469) 7 (6800%)

Total provisions (1,052) (106) 892%

Profit before tax 12,437 6,840 82%

Taxation - Current and Deferred (4,370) (2,403) 82%

Taxation - Super Tax (HY19: Prior year Rs 475 mn) (1,065) (311) 242%

(5,435) (2,714) 100%

Profit after tax 7,002 4,126 70%

Earnings per share – Rs 5.44 3.21 70%

Number of branches 678 602 13%

5Meezan Bank: HY19 Results – 70% Growth in Profitability (Unconsolidated)

Rs in Mn

 Balance Sheet HY19 CY18Growth % -

vs CY18HY18

Growth % -

vs HY18

Islamic Financing and related assets 483,894 512,564 (6%) 405,488 19%

Investments 217,160 123,743 75% 120,313 80%

Due from FIs 131,254 184,815 (29%) 202,994 (35%)

Cash and Bank Balance 109,545 73,277 49% 69,909 57%

Others 62,288 43,516 43% 42,028 48%Total Assets 1,004,141 937,915 7% 840,732 19%

Deposits 841,801 785,477 7% 697,007 21%

Due to FIs 33,260 36,408 (9%) 42,258 (21%)

Sub-ordinated Sukuk 14,000 14,000 - 7,000 100%Others 71,513 61,697 16% 56,984 25%

Total Liabilities 960,574 897,582 7% 803,249 20%

Net Assets 43,567 40,333 8% 37,483 16%

Paid-up Capital 12,861 11,692 10% 10,629 21%

Reserves / Retained Profit 31,012 28,687 8% 26,507 17%Revaluation (Deficit) / Surplus (306) (46) 565% 347 (188%)

Total Equity 43,567 40,333 8% 37,483 16%

6Meezan Bank: HY19 Results – Total Assets crossed Rs 1 Trillion (Unconsolidated)

Rs in Mn

Key Ratios HY19 HY18

Islamic Financings as % of deposits (ADR) 57.5 58.2

Non-performing financing to Gross Islamic financing - % 1.6 1.6

NPL Coverage Ratio - % 130 133

Expense to gross income ratio - Total - % 46.5 57.3

Number of branches opened during the half year 76 1

Earnings per share - on enhanced capital after Bonus Issue - Rs 5.4 3.2

Return on Average Equity - (ROAE) - % 33.7 22.9

Return on Average Assets - (ROAA) - % 1.5 1.0

Dividend Payout - % 30 25

Cash Dividend - % 20 15

Bonus Issue - % 10 10

7Meezan Bank: Key Ratios HY19 vs HY18 (Unconsolidated)

Key Ratios HY19 CY18

Total CAR - as at - % -(Min req Dec: 12.50% vs 11.90%) 16.22 14.55

Tier I CAR - as at - % -(Min req Dec: 10.00% vs 9.40%) 13.53 12.00

Common Equity Tier I - as at - %-(Min req Dec: 8.50% vs 7.90%) 11.63 10.19

Book value per Share - on enhanced capital- as at - Rs 33.88 31.36

Market Value Per Share - as at - Rs 87.16 92.39

PSX - 100 Index - as at 33,902 37,067

8Meezan Bank: Key Ratios HY19 vs CY18 (Unconsolidated)

Meezan Bank

35%

(4) Other

Islamic Banks

26%

(16) Islamic Windows

of Conventional

Banks

39%

Share of Islamic Banking Industry

Meezan Bank: Leading the Islamic Banking Industry with 35% share of deposit – Q1’19

9

Rs in Bn

• In a Islamic Banking Industry of Rs. 2.2 trillion deposits (16% of total banking industry), Meezan Bank is at a leading position with 35% deposit share

Rs in Bn

4%

8%

12%

16%

20%

24%

28%

32%

36%

40%

44%

0

500

1000

1500

2000

2500

CY13 CY14 CY15 CY16 CY17 CY18 CY Q1'19

Bank's Growth in Comparison with Islamic

Banking Industry

Total Islamic Banking Deposits

Meezan Bank Deposits

Meezan Bank as % of Islamic deposits

10Meezan Bank: Deposit growth, exceeding the Industry – HY19

Rs in Bn

81,147

117,930 148,701

195,679

235,908

289,419 302,732

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

CY13 CY14 CY15 CY16 CY17 CY18 CY HY19

Current Account Deposits

5 YR - CAGR 29%

5 YR - CAGR 22%5 YR - CAGR 12%

7,529 8,342

9,305

11,203 12,362

13,354 14,458

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

CY13 CY14 CY15 CY16 CY17 CY18 HY19

Total Banking Industry Deposits

71%

25%

2% 1%1%

DEPOSIT COMPOSITION - HIGH

GRANULARITY

Individual - 70%

Private Sector - 25%

Government - 2%

Private Sector - 1%

NBFIs - 1%

288

379

468

559

667

785 842

-

100

200

300

400

500

600

700

800

900

CY13 CY14 CY15 CY16 CY17 CY18 HY19

Meezan Bank

Meezan Bank: Strong Customer Franchise with a vast network 678 branches spread across 189 cities of Pakistan

11

Branches HY19:

Sindh: 216

Punjab: 374

Balochistan : 23

KPK: 59

AJK : 6

Total : 678

Meezan Bank: Financings – Mix and Asset Quality

12

121%

110%

116% 118%133%

139%130%

0%

20%

40%

60%

80%

100%

120%

140%

160%

-

2

4

6

8

10

12

CY13 CY14 CY15 CY16 CY17 CY18 HY19

Asset Quality

Provisions held Non Performing Loans NPL Coverage

3.6%

3.8%

3.3%

2.1%

1.5%

1.3%

1.6%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

-

100

200

300

400

500

600

CY13 CY14 CY15 CY16 CY17 CY18 HY19

Non Performing Loans & Infection Ratio

Non Performing Loans Advances Infection Ratio

-

100

200

300

400

500

600

CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18

Advances

5 YR - CAGR 32%

68%

18%

13%

1%

FINANCING MIX

Corporate - 68%

SME / Commercial -

18%

Consumer - 13%

Staff - 1%

Fee, commission and other income HY19 HY18 Growth %

Trade related fees & guarantee commissions 1,296 882 47

Debit card fees 807 621 30

Branch banking fees 789 692 14

Home remittance fees 75 59 27

Credit processing fees 52 56 (7)

Cash management fees 30 19 58

Others 369 383 (4)

3,418 2,712 26

Meezan Bank: Fee income and Other Income Grew by 26% with major contribution from Trade and ADC

13

Rs in mn

P&L Statement CY14 CY15 CY16 CY17 CY18 HY19

Target rate 10.00% - 9.50% 9.50% - 6.00% 6.00% - 5.75% 5.75% 5.75% - 10.00% 10.00% - 12.25%

Target rate- Average 9.94% 7.13% 5.85% 5.75% 7.10% 10.79%

Profit / return earned 28,487 32,894 31,027 36,427 48,624 40,007

Profit on deposits & others (15,539) (15,181) (13,238) (15,684) (20,457) (19,256)

Net Spread earned 12,948 17,713 17,789 20,743 28,167 20,751

Other income 4,819 4,588 5,723 7,624 7,463 4,459

Total Revenue 17,767 22,301 23,512 28,367 35,630 25,210

Operating Expense (10,402) (13,314) (14,787) (16,832) (19,670) (11,721)

Profit Before Provisions 7,365 8,987 8,725 11,535 15,960 13,489

Total (provisions) / reversals (467) (535) 218 (1,283) (1,168) (1,052)

Profit Before Provisions 6,898 8,452 8,943 10,252 14,792 12,437

Taxation (2,328) (3,429) (3,381) (3,939) (5,830) (5,435)

Profit After Tax 4,570 5,023 5,562 6,313 8,962 7,002

YoY Growth 15% 10% 11% 14% 42% 70% - HY19

3.55 3.91 4.32 4.91 6.97 5.44

Dividend per share - Rs 27.5%(C) 30%(C) 30%(C) 30%(C) 35%(C) & 10%(B)20%(C) & 10%(B) -

HY19

Earnings per share

Meezan Bank: Unconsolidated Profit And Loss Account: CY14 – HY19

14

Rs in million

 Balance Sheet CY14 CY15 CY16 CY17 CY18 HY19

Cash and Bank Balance 35,230 54,861 68,058 69,451 73,277 109,545

Due from FIs 90,766 101,079 129,115 147,229 184,815 131,254

Investments 114,089 146,305 130,156 119,238 123,743 217,160

Islamic Financing and related assets 175,712 207,569 311,530 420,029 512,564 483,894

Fixed and Intangible Assets 6,273 8,057 8,925 11,876 13,754 20,282

Other Assets 18,079 17,993 14,271 20,985 29,762 42,006

Total Assets 440,149 535,864 662,055 788,808 937,915 1,004,141

Bills Payable 7,298 10,100 13,757 17,175 23,751 19,569

Due to FIs 15,465 13,610 32,006 36,813 36,408 33,260

Deposits 378,744 468,281 559,398 667,181 785,477 841,801

Sub-ordinated Sukuk - - 7,000 7,000 14,000 14,000Other Liabilities 14,752 17,526 19,420 25,562 37,946 51,944

Total Liabilities 416,259 509,517 631,581 753,731 897,582 960,574

Net Assets 23,890 26,347 30,474 35,077 40,333 43,567

Paid-up Capital 10,027 10,027 10,027 10,629 11,692 12,861

Reserves/Retained Profit 13,247 15,530 18,122 23,709 28,687 31,012

Revaluation Surplus / (Deficit) 616 790 2,325 739 (46) (306)

Total Equity 23,890 26,347 30,474 35,077 40,333 43,567

Meezan Bank: Unconsolidated Balance Sheet: CY14 – HY19

15

Rs in million

Key Ratios - % CY14 CY15 CY16 CY17 CY18 HY19

Income Efficiency Ratio 58.5 59.7 62.9 59.3 55.2 46.5

Branches opened 77 123 20 30 59 18

Total no of branches 428 551 571 601 660 678

Book value per share 18.6 20.5 23.7 27.3 31.4 33.9

Earnings Per Share 3.6 3.9 4.3 4.9 7.0 5.4

NPL/Gross Loans 3.8 3.3 2.1 1.5 1.3 1.6

NPL Coverage (Total) 110 116 118 133 139 130

Advances/ Deposits (ADR) 46 44 56 63 65 57

Investment/Deposits (IDR) 30 31 23 18 16 26

CASA Ratio 71 72 75 75 73 74

Capital Adequacy Ratio (CAR) 11.9 11.0 12.9 12.9 14.5 16.2

Tier I CAR 11.1 10.2 9.4 9.9 12.0 13.5

ROE 21.4 20.0 19.6 19.3 23.8 33.7

ROA 1.18 1.03 0.93 0.87 1.04 1.5

Meezan Bank: Key Ratios CY14 - HY1916

Profit & Loss account HY19 HY18 Growth %

PSX - 100 Index 33,902 41,911 (19)

Net spread earned 20,756 12,405 67

Fee, commission, forex & other income 5,153 4,321 19

Capital (loss) / gain and div idend income (33) 65 (151)

5,120 4,386 17

GROSS BANKING INCOME 25,876 16,791 54

Operating expenses, WWF & other charges (12,024) (9,601) 25

13,852 7,190 93

Share of result of associates before taxation (301) 146 (306)

PROFIT BEFORE PROVISIONS 13,551 7,336 85

Total provisions - net (1,052) (106) 892

PROFIT BEFORE TAX 12,499 7,230 73

Taxation (5,495) (2,942) 87

PROFIT AFTER TAX 7,004 4,288 63

Non Controlling Interest (39) (142) (73)

PROFIT AFTER TAX AND NON CONTROLLING INTEREST 6,965 4,146 68

EPS - on enhanced capital - Rs. 5.42 3.22 68

Meezan Bank: Consolidated Profit After Tax Grew by 67% of Rs 6.97 Billion

17

Rs in Bn

About Bank’s Subsidiary - Al Meezan Investments

18

Since its inception in 1995, it has the distinction of being the only AMC in Pakistan with the exclusive mandate of providing Shariah compliant investment solutions to its investors

Shariah Board consists of members who are playing the leading role in the development of Islamic Finance worldwide

Manages the largest open-end Shariah Compliant Equity Fund & Voluntary Pension Fund (VPS) in the private sector with AUM of Rs. 26 Bn and Rs. 9 Bn respectively

One of the largest private sector AMCs currently managing over Rs. 103 Bn with longest track record of over 24 years of experience in Asset Management and Investment Advisory

Has one of the largest investor base of 101,732 investors along with consistently high performing funds providing competitive returns

Longest track record of managing discretionary portfolios along with advisory services to the renowned local and international clients

AM1 Rating (June 2019 PACRA) : Highest possible management quality rating

1

2

3

4

5

6

7

Developed the first Shariah Compliant Index (KMI-30) in collaboration with KSE (now PSX)8

Meezan Bank: Performance of its Subsidiary

19

UnitJune 30,

2019June 30,

2018∆ %

Assets Under Management –incl. discretionary portfolio Rs Bn 103 107 -4%

Number of Funds No. 17 15 13%

Number of Funds -including plans No. 29 25 16%

Number of Branches No. 25 20 25%

20Meezan Bank: Performance of its Subsidiary

Break-down of AUMs by Investor Category

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