Meezan Bank to Issue Rs. 7 Billion in Sukuk Bonds

Meezan Bank continues to strengthen its capital health under regulatory requirement as it plans to raise Rs. 7 billion in Sukuk bonds to raise additional tier 1 capital.

According to the stock filing, the Sukuk to be issued to the general public by way of public offering and/or to eligible institutions and other investors by way of private placement in terms of rules and regulations prescribed by State Bank of Pakistan (SBP). It means public and corporations could make an investment through subscription of the Sukuk and earn margins at the time of maturity.

In this connection, the board of directors of Pakistan’s biggest Islamic Bank have given their nod to the management to carry out further exercise in the next levels. The time period of Sukuk issuance has not been decided yet.

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What is ‘Tier 1 Capital’?

Tier 1 capital, used to describe the capital adequacy of a bank, is the core capital that includes equity capital and disclosed reserves.

According to Investopedia, Tier 1 capital is essentially the perfect form of a bank’s capital — the money the bank has stored to keep it functioning through all the risky transactions it performs, such as trading/investing and lending.

In the third quarter of 2017, the bank successfully raised Rs. 3 billion through a Right Share issue to support the bank’s growth plans as the bank’s Capital Adequacy Ratio now stands at a comfortable level of 13.6%.

Meezan Bank Posts A Profit Growth of 13% in 2017

Meezan Bank posted a double-digit growth of 13 percent in the calendar year of 2017. It made a profit of Rs. 6.31 billion in the outgoing calendar year as compared to Rs. 5.56 billion profit of 2016.

The bank continued to record double-digit profit, throughout the year, at times when major banks witnessed a decline in the profitability.

Earning Per Share of the bank increased to 6.13 by the end of 2017 from 5.45 by end of 2016.

The bank announced a final cash dividend of Rs. 1.25 per share. This is an addition to the interim dividend of Rs 1.75 percent share paid out in the last three quarters.