Press Release
JCR-VIS Upgrades Short-term Rating of Meezan Bank Limited to A-1+
Karachi, June 1, 2011: JCR-VIS Credit Rating Co. Ltd. (JCR-VIS) has maintained the medium to long term entity rating of Meezan Bank Limited (MBL) at ‘AA-’ (Double A Minus) with Stable Outlook. The short term rating of MBL has been upgraded from ‘A-1’ (A-One) to ‘A-1+’ (A-One Plus).
MBL continues to enjoy the highest market share in the Islamic Banking Industry (IBI) in terms of total deposits at 34% at end-CY10. Growth in deposits to Rs. 131b by end-CY10 coupled with higher proportion of low-cost retail deposits is indicative of strong franchise value. Liquid reserves being maintained are high and when viewed together with depositor mix, translate into sound liquidity profile for the institution. Significant growth has been witnessed in the bank’s investment portfolio in the past six months with channelization of liquidity in GoP Ijarah Sukuks.
Net financing portfolio of the bank features concentration as lending strategy of the bank is focused on building relationships with top-tier clients. So far, the bank’s selective approach to financing has proved its merit as infection levels have remained low. However, in view of limited universe of top-tier clients, significant growth in financing portfolio, while maintaining asset quality indicators may pose a challenge.
Profitability of the bank has improved over the years supported by low cost funding and increasing business volumes. Going forward, in view of the target to establish 53 branches in CY11, operational efficiency indicators may come under some pressure.
For further information on this rating announcement, please contact Ms. Sobia Maqbool, CFA (Ext: 506) or Ms. Sabeen Saleem, CFA (Ext: 510) at 35311861-70 (10 Lines) or fax to 35311872-73.
Javed Callea
Advisor