Press Release
VIS Reaffirms Entity Ratings of Pak Oman Investment Company Limited
Karachi, June 30, 2025: VIS Credit Rating Company Ltd. (VIS) has reaffirmed entity ratings of Pak Oman Investment Company Limited (‘POIC or the Company’) at ‘AA+/A1+’ (Double A Plus/A One Plus). The long-term rating of ‘AA+’ signifies high credit quality; protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. The short-term rating of ‘A1+’ signifies strongest likelihood of timely repayment of short-term obligations with outstanding liquidity factors. Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on June 28, 2024.
The ratings reflect POIC sound ownership structure, maintained through equal participation in a joint venture between the Government of Pakistan, represented by the Ministry of Finance (MoF), and the Sultanate of Oman, represented by the Oman Investment Authority (OIA). Dual sovereign ownership underpins the DFI's strong capital access if needed as well as its financial resilience. The Government of Oman is rated BB+ by two international rating agencies. Governance practices remain aligned with regulatory expectations, supported by a competent board and experienced senior management. The implementation of strategic technology upgrades and ESG initiatives further reflects management’s focus on modernization and sustainability.
POIC continues to play a pivotal role in strengthening economic ties between Pakistan and Oman. It has actively supported recent high-level government and business engagements, such as official visits, trade expos, and investment forums. By facilitating cross-border investments and offering advisory services to prominent organizations in both countries, POIC is fostering deeper commercial cooperation. Its initiatives align with broader strategic frameworks, including Oman Vision 2040, reinforcing POIC’s position as a key facilitator of bilateral investment and collaboration.
On a standalone basis, the DFI’s investment portfolio continues to be largely composed of high-quality sovereign instruments, ensuring strong credit quality and liquidity. Net advances declined due to a cautious stance amid a high-interest rate environment that was not conducive to lending. Furthermore, while NPL’s rose, the reduction in gross advances portfolio was relatively larger, thereby elevating infection. Provisioning coverage remains adequate, as management has prudently accounted for a few accounts on a subjective basis, with no significant provisioning impact expected going forward.
Profitability came under pressure in 2024 as the DFI faced a challenging environment, where investment yields declined more rapidly than borrowing costs, compressing net interest margins, however reversal of credit loss provisions and strong non-interest income from capital gains offset that pressure. Furthermore, in the later part of the year DFI has managed to get low-cost funding from different avenues which had a significant positive impact on Q1 2025 profitability and is expected to continue till 3QCY25.
Liquidity indicators showed some variability, with a reduction in the coverage ratio and continued use of short-term funding. Institution’s capitalization profile continues to remain strong, with an improvement in the capital adequacy ratio that remains comfortably above regulatory requirements, reflecting prudent balance sheet management and underlying financial resilience.
Going forward, sustained improvements in profitability, asset quality, and leverage will remain important for ratings.
For further information on this rating announcement, please contact at 021-35311861-64 or email at info@vis.com.pk
Applicable Rating Criteria:
Government Supported Entities:
https://docs.vis.com.pk/docs/Meth-GSEs202007.pdf
Financial Institutions Rating:
https://docs.vis.com.pk/Methodologies%202024/Financial-Institution-v2.pdf
Rating Scales & Definitions:
https://docs.vis.com.pk/docs/VISRatingScales.pdf