Press Release

JCR-VIS Reaffirms Entity Ratings of Al Baraka Bank (Pakistan) Limited

Karachi, June 29, 2012: JCR-VIS Credit Rating Company Limited has reaffirmed the entity ratings of Al Baraka Bank (Pakistan) Limited (ABPL) at ‘A/A-1’ (Single A/A-One). Outlook on the assigned ratings is ‘Stable’.

The ratings assigned to ABPL incorporate implicit support of Al Baraka Banking Group, Bahrain, which is the major shareholder of the bank. Continued financial support in terms of equity injection will be required over at least the next two years to create room for growth and meet the enhanced minimum capital requirement.

In its first year of operations, post merger, ABPL has showcased improved profitability on the back of administrative cost controls and recoveries against non-performing financings. While overall loan portfolio was largely maintained in terms of size in FY11, the bank has managed to establish relationship with some sound counterparties. The management is actively working to re-activate earnings from non-performing assets.

Deposit cost of the bank has been on the higher side. Given the increased focus on rationalizing cost of deposits, there is notable improvement in deposit cost on a month on month basis since October’11, and future trend in this respect will continue to be monitored by JCR-VIS. Over the last year, surplus liquidity has largely been channeled into GoP Ijarah Sukuks; spreads from this avenue have squeezed on account of discount rate cut in October 2011. Liquidity profile of the bank is considered sound in view of adequate liquid reserves against deposits and borrowings.

For further information on this rating announcement, please contact the undersigned (Ext: 408) or Ms. Sobia Maqbool, CFA (Ext: 506) at 92-21-35311861 or fax to 92-21-35311873.



Jamal Abbas Zaidi
Deputy CEO

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2012 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .