The Board of Directors of Meezan Bank in its meeting held in Karachi approved the audited unconsolidated financial statements of the Bank and its audited consolidated financial statements for the year ended on December 31, 2016. The meeting was presided by Mr. Riyadh S.A.A. Edrees -Chairman of the Board, Mr. Faisal A. A. A. Al-Nassar – Vice Chairmanof the Board also attended the meeting.
By the Grace of Allah (SWT), Meezan Bank has continued its growth momentum and recorded good results for the year 2016. Profit after tax increased to Rs 5,562 million as compared to Rs 5,023 million last year, a growth of 11% even in the backdrop of lower interest rates and despite intense competition in the Banking Industry.
The Bank recorded Earnings per Share (EPS) of Rs 5.55. The Board recommended the final cash dividend of Rs 1.25 per share (12.5%) for the year 2016. This declaration, together with the earlier interim cash dividend of 17.5% paid in the third quarter of 2016, brings the total payout for the year to Rs 3.00 per share (30%). The Bank has maintained its unbroken payout record since the date of listing on the Stock Exchange. A significant achievement during the year was the impressive increase in the financing portfolio of the Bank that increased by 50%, from Rs. 208 billion to Rs. 312 billion. This growth in financings has outpaced the 17% average financing growth of the Banking industry in the same period.
The Bank’s focused remained on successfully capturing quality credit opportunities in a relatively stagnant private sector market and actively pursued growth in financings in all segments especially in SME/Commercial and Consumer Financing (primarily Car Ijarah and Easy Home) that grew by 62% and 66% respectively over last year. Advance to Deposits Ratio (ADR) of the Bank now stands at an impressive 55%, as compared to 44% in 2015. Another significant achievement is the reduction in the Bank’s ratio of non-performing financings to total financing (NPL ratio) that now stands at 2.14%, down from 3.27% in 2015 as a result of major recoveries made by the Bank during 2016 which highlights quality of Bank’s portfolio.
Meezan Bank’s NPL ratio is one of the lowest in the banking Industry and bears testimony to the Bank’s prudent financing strategy backed by a sound risk infrastructure and rigorous remedial and recovery efforts. The average NPL ratio for the banking industry is 11%. The focus remains to build a high quality and well-diversified portfolio targeting top tier corporate, commercial and retail clients. The Bank’s equity closed at Rs 28.15 billion and the Bank’s Capital Adequacy Ratio (“CAR”) sits at comfortable level of 12.91% as compared to 10.98% in 2015. The Bank’s CAR is well above the minimum mandatory level of 10.65%.
During the year, the Bank successfully issued of Sub-ordinated Sukuk (Tier II) amounting to Rs. 7 billion that has further strengthened the CAR and will support the future growth strategy of the Bank. The issue received an overwhelming response from investors as a result of which the Bank exercised its Green shoe option and accepted offers Rs. 3 billion more than the initial issue size of Rs. 4 billion.