Press Release

JCR-VIS reaffirms ratings of Zarai Taraqiati Bank Limited at AAA/A-1+

Karachi, July 3, 2007: JCR-VIS Credit Rating Company Limited has reaffirmed the credit ratings of Zarai Taraqiati Bank Limited (ZTBL) at ‘AAA/A-1+’ (Triple A / A-One plus) with ‘Stable’ outlook. The AAA/A-1+ ratings of ZTBL are based on the federal government guarantee for timely repayment of credit lines obtained from the State Bank of Pakistan (SBP). The guarantee covers the principal amount of the lines together with profit payable in arrears. The safety of deposits has also been guaranteed by the Government of Pakistan (GoP) under the Banks’ (Nationalization) Act 1974.

The Asian Development Bank had extended funding to the bank to provide for loan losses. Funds had also been allocated to restructure the organization; however, progress in this regard has been slow.

The bank acts as a disbursing arm of the government and lacks independence in pricing of advances. Although the bank continues to focus on recovery of outstanding advances, significant delinquencies exist within the portfolio. Meanwhile, terms of the SBP debt have still not been finalized, constraining profitability and financial viability of the bank. In view of the above, JCR-VIS has revised the standalone ratings to ‘B/B’ (Single B/Single B) from ‘BB+/B’ (Double B Plus / Single B). Outlook on the medium to long term rating is ‘Negative’.

For further information on this rating announcement, please contact Mr. Safdar Kazi (Ext: 604) or Ms. Sabeen Saleem (Ext: 608) at 5311861-70 (10 lines) or fax to 5311872-3.




Faheem Ahmed
President & 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 July 03, 2007 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.