Meezan Bank : TRANSMISSION OF QUARTERLY REPORT OF MEEZAN BANK LIMITED FOR THE PERIOD ENDED MARCH 31, 2024

C O N T E N T S

Corporate Information	03
Directors' Review	04
Condensed Interim Unconsolidated Statement of Financial Position	12
Condensed Interim Unconsolidated Profit and Loss Account	13
Condensed Interim Unconsolidated Statement of Comprehensive Income	14
Condensed Interim Unconsolidated Statement of Changes in Equity	15
Condensed Interim Unconsolidated Cash Flow Statement	17
Notes to and Forming Part of the
Condensed Interim Unconsolidated Financial Statements	18
Condensed Interim Consolidated Statement of Financial Position	59
Condensed Interim Consolidated Profit and Loss Account	60
Condensed Interim Consolidated Statement of Comprehensive Income	61
Condensed Interim Consolidated Statement of Changes in Equity	62
Condensed Interim Consolidated Cash Flow Statement	64
Notes to and Forming Part of the
Condensed Interim Consolidated Financial Statements	65

01

C O R P O R A T E I N F O R M A T I O N

AS OF MARCH 31, 2024

Board of Directors	Riyadh S. A. A. Edrees	Chairman
	Faisal A. A. A. Al-Nassar	Vice Chairman
	Bader H. A. M. A. Al-Rabiah
	Saad Ur Rahman Khan
	Faisal Fahad Al-Muzaini
	Tariq Mahmood Pasha
	Mohamed Guermazi
	Mohammad Abdul Aleem
	Nausheen Ahmad
	Yousef S.M.A Al-Saad
	Irfan Siddiqui	President & CEO
Shariah Board	Justice (Retd.) Muhammad Taqi Usmani	Chairman
	Dr. Muhammad Imran Ashraf Usmani	Vice Chairman
	Sheikh Esam Mohamed Ishaq
	Mufti Zubair Ahmed
	Mufti Muhammad Naveed Alam
Management	Irfan Siddiqui	President & CEO
	Ariful Islam	Deputy CEO
	Syed Amir Ali	Deputy CEO
Board Audit Committee	Mohammad Abdul Aleem
	Faisal A.A.A. Al-Nassar
	Mohamed Guermazi
	Saad Ur Rahman Khan
Board Risk	Faisal A. A. A. Al-Nassar
Management Committee	Saad Ur Rahman Khan
	Bader H. A. M. A. Al-Rabiah
	Yousef S.M.A Al-Saad
Board Human Resources,	Riyadh S. A. A. Edrees
Remuneration & Compensation	Mohammad Abdul Aleem
Committee	Nausheen Ahmad
Board Information	Saad Ur Rahman Khan
Technology Committee	Riyadh S. A. A. Edrees
	Faisal A. A. A. Al-Nassar
	Irfan Siddiqui
Board IFRS 9 Implementation	Riyadh S. A. A. Edrees
Oversight Committee	Faisal Fahad Al-Muzaini
	Irfan Siddiqui
Resident Shariah Board Member	Mufti Muhammad Naveed Alam
Chief Financial Officer	Syed Imran Ali Shah
Company Secretary	Muhammad Sohail Khan
Auditors	A. F. Ferguson & Co., Chartered Accountants
Legal Adviser	Haidermota & Co. Advocates
Registered Office	Meezan House
and Head Office	C-25, Estate Avenue, SITE, Karachi - 75730, Pakistan
	Phone: [phone], Fax: [phone]
	24/7 Call Centre: (92-21)111-331-331 & 111-331-332
E-mail	[e-mail]
Website	www.meezanbank.com
	www.meezanbank.pk
Shares Registrar	THK Associates (Pvt.) Ltd
	Plot No, 32-C, Jami Commercial, Street 2, DHA, Phase VII, Karachi - 75500, Pakistan
	Phone: [phone]

Email: [e-mail], [e-mail]

Website: www.thk.com.pk

03

MEBL MARCH-2024

D I R E C T O R S ' R E V I E W

The Board of Directors is pleased to present the condensed interim unaudited unconsolidated and consolidated financial statements of Meezan Bank Limited for the first quarter ended March 31, 2024.

Economy

Pakistan's macroeconomic and political landscape has been navigating a host of pressing challenges for the past two years, stemming from both domestic and international events. These challenges encompass the ripple effects of monetary tightening across all major economies, escalating global commodity prices especially after the start of Russia-Ukraine war, post-Covid supply chain disruptions being compounded by the events in the Middle East and domestic political volatility and fiscal issues. Despite these formidable obstacles, early signs of nascent economic recovery are now discernible, bolstered by prudent policymaking and reforms leading to influx of funds from multilateral and bilateral partners.

With a new government now in place and showing resolve to address the persistent issues undermining the country's economic growth, confidence is gradually returning to the economy, albeit at a measured pace. This includes strengthening public finances through fiscal consolidation and expanding the tax base, alongside improvements in tax administration, restoring the viability of the energy sector and reforms in State Owned Enterprises. According to projections by the World Bank, Pakistan's real GDP is anticipated to expand by 1.8 percent in FY24, a notable improvement compared to (0.2) per cent in FY23.

The successful conclusion of the International Monetary Fund (IMF)'s Stand-By Arrangement (SBA) programme in March 2024, marked by a Staff-Level Agreement with a $1.1 billion disbursement, provides significant support to the economy. Headline inflation is now on a downward trajectory, reaching a twenty-two-month low of 20.7 percent in March 2024 versus

35.4 percent in March 2023. However, the State Bank of Pakistan (SBP) has opted to maintain the policy rate at 22 percent in its latest monetary policy statement announced in March 2024, citing risks to the inflation outlook. Measures taken to stabilize the Pakistani Rupee against the US Dollar, including structural reforms for Exchange Companies, have been effective. Consequently, the PKR remained stable during the first quarter of 2024, strengthening to PKR 277.9/US$ by the quarter end, compared to PKR 281.9/US$ at December 2023 year end. The Current Account reflects a deficit of $1.0 billion for Jul-Feb FY2024, a notable improvement from the $3.8 billion deficit recorded last year, primarily driven by import rationalisation.

The performance of the Pakistan Stock Exchange (PSX) remained upbeat in the initial three months of 2024, buoyed by political and economic stability. The PSX-100 index closed at 67,005 points, marking a gain of 4,554 points or 7% since December 2023 and 27,004 points or 68% from March 2023. Overall, the Pakistani economy appears to be on a path of recovery with decreasing inflation, the stabilized position of the PKR against USD and support from the IMF. The incumbent Government has indicated negotiating a larger and longer duration International Monetary Fund IMF programme in the next few months.

Financial Highlights

With the blessings of Allah, Meezan Bank achieved commendable results for the first quarter of 2024. Profit after Tax surged to Rs 25.4 billion from Rs 15.4 billion in the corresponding quarter last year representing a remarkable growth of 65%. The Basic Earnings per Share clocked in at Rs 14.18 per share in March 2024 compared to Rs 8.62 per share - a year ago. The Bank's Return on Equity (ROE) surpassed 50% demonstrating the Bank's robust financial performance while Return on Assets (ROA) crossed 3%. Alhamdullillah, we have consistently maintained ROE above the banking industry average in line with our focus on value creation for our shareholders. Our steady growth in profitability coupled with prudent approach of striking a balance between dividend pay-outs and profit retention has led to strong internal capital generation, boasting a Capital Adequacy Ratio (CAR) of 20% plus.

We are pleased to announce that the Board has approved an interim cash dividend of Rs 7.00 (70%) for the first quarter ended on March 31, 2024. We take pride in our longstanding tradition of

04

D I R E C T O R S ' R E V I E W

consistently paying dividends every year since our listing on the Pakistan Stock Exchange. Meezan maintained its position as the most valuable bank in Pakistan with a market capitalisation of $ 1.38 billion, closing the quarter at Rs 383 billion, which underscores the investors' confidence in the Bank's management team, performance and growth prospects. Below are the financial highlights of Meezan Bank:

			Rupees in millions
	Profit & Loss Account	Jan - Mar		Jan - Mar		Growth %
	2024		2023
	Profit / return earned on financing, investments and placements	119,146		81,953		45%
	Profit on deposits and other dues expensed	(51,582)		(40,907)		26%
	Net spread earned	67,564		41,046		65%
	Fee, commission and other non -funded income	6,358		3,865		65%
	Operating income	73,922		44,911		65%
	Operating and other expenses	(21,208)		(14,937)		42%
	Profit before provisions	52,714		29,974		76%
	Reversal / (Provisions) for credit loss - net	344		(2,130)		(116)%
	Profit before tax	53,058		27,844		91%
	Taxation	(27,651)		(12,420)		123%
	Profit after tax	25,407		15,424		65%
	Basic Earnings per share - Rupees	14.18		8.62		65%
	Number of branches	1,007		972		4%
			Rupees in millions
	Statement of Financial Position	March 31,		December 31,		Growth %
	2024		2023
	Total Assets	3,042,655		3,012,109		1%
	Investments	1,626,292		1,572,388		3%
	Islamic financing and related assets - Gross	930,822		992,027		(6%)
	Deposits	2,270,072		2,217,474		2%
	ADR (Gross Advances to Deposits)- %	41%		45%		(8%)
	Equity	194,587		184,908		5%

Returns from financing, investments and placements experienced a notable increase, reaching Rs 119 billion compared to Rs 82 billion in the corresponding period of the previous year, reflecting a significant growth of 45%. This growth was propelled by the higher underlying benchmark rate and a higher average volume of earning assets. Throughout the quarter, the Policy Rate averaged at 22% compared to 17.71% in March 2023, representing an increase of 429 basis points or 24%. Returns on deposits and other dues expensed, on the contrary, grew to Rs

51.6 billion from Rs 40.9 billion in March 2023, a rise of 26% primarily due to reduction in average borrowings from the SBP under Shariah Compliant Open Market Operations (OMO) and Standing Ceiling Facility (window). The average OMO and window borrowings dropped from Rs 420 billion in March 2023 to Rs 135 billion in the current quarter, depicting a decline of 68%. The return on deposits during the similar period increased from Rs 17.6 billion to Rs 36.5 billion reflecting a growth of 107%, attributable to both the rise in average deposit volumes as well as an uptick in depositors' profit rates. On an overall basis, our net spread increased to Rs 68 billion from Rs 41 billion in corresponding period last year, reflecting a rise of 65%.

Fee, commission and other income also demonstrated strong growth, increasing by 65% to reach Rs 6.4 billion from Rs 3.9 billion in March 2023. Core fee and commission income posted a robust rise of 40% clocking in at Rs 5.0 billion with key contributors being debit card, branch banking

05

D I R E C T O R S ' R E V I E W

and trade related income. During the quarter, our debit card portfolio expanded with an addition of more than 246,000 cards, taking the total portfolio size to more than 3.4 million cards. Overall spend on debit cards surged from Rs 49.6 billion in first quarter of 2023 to Rs 70.9 billion in current quarter marking a substantial increase of 43%, with a remarkable fivefold increase in NFC transactions. Foreign exchange income grew to Rs 478 million compared to a loss of Rs 155 million in corresponding period last year due to stability in PKR during the current quarter and better trade flows.

Operating and other expenses rose from Rs 14.9 billion to Rs 21.2 billion, mainly attributable to high inflation, devaluation of the rupee, strategic investments in IT-related projects and increase in costs associated with branch expansion - an investment in future. However, the increase in expenses was offset by income growth, resulting in further enhancement of our income efficiency ratio which now stands at 29% versus 33% in March 2023. We remain steadfast in our commitment to cost rationalization and process automation strategies to attain a more efficient and streamlined operating cycle.

Total assets closed at Rs 3 trillion in line with December 2023 year end number. Investments portfolio expanded by 3% compared to the previous year, reaching Rs 1.63 trillion. This expansion can be directly attributed to the regular Sukuk auctions by the Government of Pakistan which has eased liquidity management challenges historically faced by Islamic Banking Industry (IBI).

In response to ongoing slowdown in private sector credit amid monetary tightening, Meezan has proactively moderated its credit lending activities, prioritizing the preservation of financing portfolio's quality. Consequently, gross financing portfolio decreased by 6% from Rs 992 billion as at December 2023 end to Rs 931 billion at the end of the current quarter, translating into an Advances to Deposits Ratio (ADR) of 41%. With the ADR related tax now being applicable, the Bank will strive to increase its finances ratio in order to meet its ADR targets.

We remain steadfast in our commitment to maintaining a high-quality and diversified asset mix, strategically allocated across various sectors including Corporate, Commercial & SME, and Consumer markets. In our strategic endeavours across SME and agriculture financing, Meezan is actively participating in various financing programs, including Islamic SME Aasaan Financing (ISAAF) scheme, farm mechanization, women entrepreneur, and financing facility for storage of agriculture produce. Through SBP's Farmer Literacy Program, Meezan organized Kissan Baithak "Farmer's Gatherings" in rural communities, conducted Farmer Literacy Programs and provided financial support to farmers to acquire solar-powered tube well systems contributing to sustainable farming practices. Meezan Bank continues to uphold exemplary asset quality, surpassing industry standards with a non-performing financing ratio below 2%. Meezan maintains a comfortable level of provisions against our non-performing financings translating into a coverage ratio of more than 190%.

Deposits portfolio also remained aligned with last year-end numbers closing at Rs 2.27 trillion. Current Account (CA) deposits constitute nearly half of the deposit book, amounting to Rs 1.08 trillion while Current and Savings Account (CASA) deposits represent 89% of the total deposit book amounting to Rs 2.03 trillion. Meezan Bank has expanded its clientele by acquiring approximately 215,000 new-to-bank customers, thereby supplementing our existing deposit relationships.

Meezan Bank has been steadfast in its digital transformation strategy, aiming to enhance customer experiences and streamline back-office operations. Embracing a hybrid growth model, we have expanded our physical presence in underserved regions of the country while simultaneously onboarding customers digitally. Strategically dispersed across the nation, our branch network comprises of 1,007 branches across 334 cities, whereas our ATM network of over 1,100 touchpoints nationwide have facilitated transactions worth around Rs 517 billion. Additionally, our Merchant Acquiring Business spans over 20,000 POS terminals and over 300 E-commerce merchants across more than 320 cities. Notably, 45% of our overall Card Acquiring Business originates from SMEs vendors, showcasing our commitment to financial inclusion. During the first quarter of 2024, over 87 million financial transactions amounting to over Rs 4 trillion were executed through our

06

D I R E C T O R S ' R E V I E W

Mobile App, setting a new benchmark for the banking industry in Pakistan.

The VIS Credit Rating Company Limited has reaffirmed Meezan with highest possible credit rating - 'AAA' (Triple A) rating for the Long Term and an 'A1+' (A-One Plus) rating for the Short Term, maintaining a stable outlook.

Outlook

Meezan remains committed to fostering the economic growth and stability of the nation by strengthening the Islamic Banking Industry and aligning with the government's shift towards Islamic Finance, as guided by the Honourable Federal Shariat Court (FSC) directive to fully transition the economy into a Shariah-Compliant financial system. We aim to maintain a balanced growth strategy, diversifying sector exposures while surpassing regulatory stability thresholds. Our expansion efforts prioritize both physical and digital outreach, with a focus on providing top-tier digital services to maintain our leading position in the industry.

With heartfelt appreciation, gratitude and respect, we bid farewell to our Deputy Chief Executive Officer (DCEO), Mr Ariful Islam, who has been a cornerstone of our management team for the past 25 years. As we reflect on Arif's remarkable tenure, we are reminded of his unwavering dedication, visionary leadership and tireless commitment that has propelled the Bank to one of the largest, Most Valuable and the Most Profitable Bank in the country. Under his stewardship, Meezan has not only achieved significant milestones but has also fostered a culture of innovation, collaboration and service excellence that define our banking practices. As Arif embarks on a new chapter in his life, we extend him our heartfelt gratitude and best wishes for the future. Though Mr Islam may be stepping away from his formal role, his impact and influence will continue to resonate within the Bank for years to come.

Syed Amir Ali, having rejoined the Bank this past October, is already infusing our operations with new vigour and insight and has formally resumed the charge as the DCEO of the Bank. Amir's proactive involvement fortifies our Vision and Mission and this unprecedented transition underscores our commitment to continuity, growth and innovation.

We extend our heartfelt appreciation to the State Bank of Pakistan, the Ministry of Finance and the Securities and Exchange Commission of Pakistan for their unwavering commitment to establishing a sustainable Islamic financial system in the country. Our significant accomplishments would not have been possible without the proactive support of our diverse customer base, to whom we are deeply indebted. We also express our gratitude to the Board of Directors, members of the Shariah Board, our shareholders, holders of Additional Tier I Sukuk and Subordinated Sukuk (Tier II) for their continuous patronage for establishing Meezan Bank as the leading Islamic Bank in the country.

We convey our appreciation to every member of our devoted team for their diligent efforts and steadfast dedication to furthering the mission of Islamic Banking. Above all, we humbly acknowledge and offer gratitude to Allah Almighty for His continuous blessings upon our Bank and each one of us, which have enabled our notable achievements within a relatively brief timeframe. We beseech Him for His continued support, granting us the fortitude and insight to continue advancing our vision of "establishing Islamic banking as the banking of first choice".

On behalf of the Board

Riyadh S.A.A. Edrees	Irfan Siddiqui
Chairman	President & CEO
Karachi:
April 18, 2024

07

(0.2)

08