The Board of Directors (BoD) of Meezan Bank Limited, the country’s largest Islamic bank, has announced the formation of an Exchange Company (EC) as a wholly-owned subsidiary.
The bank informed the Pakistan Stock Exchange (PSX) of the event on Friday.
“The Board of Directors of Meezan Bank Limited has approved the establishment of an EC with an initial paid-up capital of up to Rs1 billion through circular resolution No. 6 of 2023 dated September 12, 2023,” according to the announcement.
The development is subject to State Bank of Pakistan (SBP) approval and clearance, as well as completion of other regulatory compliance requirements.
“This Exchange Company would be a 100% owned subsidiary of the bank,” it added
United Bank Limited (UBL) has also stated that it will establish an EC as a wholly-owned subsidiary.
Last week, the SBP decided to implement ‘ structural reforms’ in the EC sector in order to strengthen regulations in the face of the huge decrease in the rupee’s value in the open market.
“As part of these reforms, leading banks actively engaged in foreign exchange business will establish wholly-owned Exchange Companies (EC) to cater to the legitimate foreign exchange needs of the general public,” according to a statement from the SBP.
Furthermore, the SBP increased the minimum capital requirement for EC from Rs200 million to Rs500 million, hence improving the barrier to entry for the private sector.
Meezan Bank reported earnings of Rs32.91 billion for the first six months of 2023, a 92% increase over the previous year’s profit-after-tax of Rs17.14 billion.
For the six-month period, its earnings per share were Rs18.30. The Board of Directors also declared a cash dividend of Rs4 per share, or 40%, for the fiscal year ended June 30, 2023.