Press Release
VIS Reaffirms Entity Ratings of Bank of Khyber
Karachi, June 30, 2026: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Bank of Khyber (‘BOK’ or the ‘Bank’) at 'AA-/A1' (Double A Minus/A One). Medium to long term rating of 'AA-' indicates high credit quality; protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. Short term rating of 'A1' indicates strong likelihood of timely repayment of short-term obligations with excellent liquidity factors. The previous rating action was announced on June 30, 2025.
BOK was established under the Bank of Khyber Act, 1991 and commenced operations as a scheduled commercial bank in 1994. The Bank is listed on the Pakistan Stock Exchange and provides a comprehensive range of conventional and Islamic banking products and services to retail, commercial, corporate, SME, agriculture, and public sector clients. The Bank's registered office is located in Peshawar, Khyber Pakhtunkhwa. As of Mar'26, BoK operated a network of 254 branches, including 199 dedicated Islamic banking branches, reflecting its strategic focus on expanding its Islamic banking franchise across Pakistan.
The ratings reflect the Bank’s strategic importance as a majority-owned entity of the Government of Khyber Pakhtunkhwa (GoKP), providing strong institutional support and a well-established franchise, particularly in Khyber Pakhtunkhwa. The ratings are underpinned by a stable governance framework, experienced management team, and strengthening risk management practices. During the review period, the Bank continued to execute its strategic transformation towards becoming a full-fledged Islamic bank, evidenced by the rapid expansion of its Islamic banking network and the strengthening of its Shariah governance framework. The Bank maintained a conservative business strategy, prioritizing capital preservation and asset quality through a higher allocation to sovereign investments. Going forward, management intends to gradually expand lending to high-quality private sector borrowers, particularly in the SME, agriculture, consumer, and trade finance segments, to enhance portfolio diversification.
The Bank's financial risk profile remained sound, supported by stable asset quality, strong provisioning, a predominantly sovereign investment portfolio, and robust liquidity and funding metrics. Management expects to maintain a conservative Advance-to-Deposit Ratio while supporting investment growth through continued deposit mobilization and selective market borrowings. Profitability improved in CY25 on the back of lower funding costs, higher non-markup income, and provisioning reversals, although earnings moderated in 1QCY26 due to a lower interest rate environment. Capitalization remained comfortably above regulatory requirements, providing adequate capacity to support future growth. The ratings remain dependent on the Bank's ability to preserve asset quality, successfully execute its Islamic banking transformation, gradually expand lending book, maintain strong capital and liquidity buffers, while sustaining profitability.
For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria:
Financial Institutions
https://docs.vis.com.pk/Methodologies-2026/FI-Methodology-26.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf