Press Release

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

Karachi, June 28, 2008: 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 bank has made considerable headway with respect to automation of operations. This progress has been made with the assistance of Asian Development Bank sponsored program loan although funds were only available for drawdown until the end of June 2008.

During 2007, the bank enhanced focus on collections and Rs. 5 billion were recovered against previously charged off amounts. These funds were mostly channeled into liquid avenues as the loan portfolio was maintained at the preceding year level, improving the amount of liquid reserves carried on books. In view of this, JCR-VIS has improved the standalone ratings from ‘B/B’ (Single B / Single B) to ‘B+/B’ (Single B Plus / Single B). Outlook on the ratings has been revised from ‘Negative’ to ‘Stable’.

As a disbursing arm of the government to the agricultural community, the bank has lacked independence in pricing of its loan products while the restructuring plan initially proposed for ZTBL with respect to the guaranteed credit lines has been subject to much negotiation over the years in terms of the proposed capping of mark up rates thereon. These factors have critical implications for the financial viability of the institution and will continue to keep its financial health constrained.

For further information on this rating announcement, please contact Mr. Safdar Kazi (Ext: 501) or Ms. Sabeen Saleem (Ext: 510) 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 June 28, 2008 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.