Press Release
VIS Reaffirms Corporate Governance Rating of Pakistan Kuwait Investment Company (Private) Limited
Karachi, November 30, 2023: VIS Credit Rating Company Limited (VIS) has reaffirmed Corporate Governance Rating of the Pakistan Kuwait Investment Company (Private) Limited (PKIC) at ‘CGR-9+’. This rating reflects a ‘very high level of Governance’. Previous rating action was announced on December 15, 2022.
Pakistan Kuwait Investment Company (Private) Limited (‘PKIC’ or ‘DFI’) was incorporated under the Joint Venture (JV) Agreement between the Governments of Pakistan (GoP) and Kuwait. Shareholding of PKIC is equally vested between State Bank of Pakistan (SBP) and Kuwait Investment Authority (KIA). PKIC as a Development Finance Institution (DFI) is engaged in the provision of corporate finance, advisory and investment banking services. In line with the JV, each sponsor nominates three directors on the Board.
The assigned ratings for PKIC take into account its strong corporate governance framework, which is supported by an effective Board oversight. PKIC has seen changes in its Board composition, including the appointment of a new Managing Director and a GoP nominee director. The Board promotes and adheres to the corporate governance practices. Overall attendance record of Board and its Committees’ meetings was good. The senior management team comprised seasoned professionals and has largely depicted stability over time. In addition, there is a clear succession plan in place for the key positions to ensure smooth transition of responsibilities at the top of the hierarchical pyramid.
PKIC's risk governance emphasizes the enhancement of risk management practices, with effective credit risk management and adherence to Green Banking Guidelines. The Asset & Liability Committee manages market and liquidity risks through various tools and strategies, including stress testing and monitoring of regulatory ratios to ascertain the health of portfolios. Operational risks are managed in line with regulatory standards, utilizing tools like the "Risk Nucleus" and maintaining a Business Continuity Plan. Moreover, PKIC is proactive in updating policies to meet SBP's requirements and has also implemented IFRS-9.
PKIC's control framework features a qualified internal audit team conducting risk-based audits and adherence to the Committee of Sponsoring Organizations (COSO) Framework for Internal Control, in line with SBP guidelines. The management ensures the effectiveness of internal controls over financial reporting and complies with SBP directives. Anti-Money Laundering (AML) compliance and the onboarding process are key focus areas with emphasis on training and outreach sessions. PKIC's initiative in digital banking includes the establishment of Raqami Islamic Digital Bank Limited, the first Shariah-compliant Digital Retail Bank, in partnership with notable investors. PKIC has also established an Islamic Finance Division, with in-principle approval from SBP, to offer Shariah-compliant financial products and services. Accordingly, a Shariah Advisor has been appointed, who reports directly to the Board. PKIC maintains transparent communication with stakeholders through comprehensive disclosures on its website and has improved workforce gender diversity, with an increase in female representation and inclusion in leadership roles.
For further information on this ratings announcement, please contact Ms. Tayyaba Ijaz, CFA at 042-35723411-13 (Ext. 8005) and/or the undersigned at 021-35311861-64 (Ext. 207) or email at info@vis.com.pk.
Sara Ahmed
Director
Applicable Rating Criteria: Corporate Governance Rating (October 2023)
https://docs.vis.com.pk/docs/CoporateGovernance-2023.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf