Press Release

JCR-VIS Reaffirms Entity Ratings of Sindh Bank Limited at AA-/A-1

Karachi, May 21, 2012: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Sindh Bank Limited (SBL) at ‘AA-/A-1’ (Double A Minus/A-One). Outlook on the assigned ratings is ‘Stable’.

The rating derives strength from 100% holding of Government of Sindh (GoS) in SBL. As a new bank with start-up capital of Rs. 10b, equity base is sizeable in relation to risk weighted assets. The management plans to gradually build the loan book over time, mostly in commodity related sectors. In addition to this, small ticket agri-products have also been developed, though the quantum of lending in this segment is currently very small.

While deposit mix features concentration and comprises large public sector deposits, liquid assets are considered adequate in relation to deposits & borrowings. The management is projecting wider access to funding to be developed over time through rapid expansion in branch network. In the first year of operations, SBL has set up 50 branches, with another 110 to be established in the on-going year.

Given the sizeable equity base and channelization of the same in low risk investments, the bank posted a profit for CY11. Overall spreads of the bank are low on account of relatively high cost on public sector deposits. In absolute terms, operating costs are expected to rise as the size of network increases, placing some pressure on efficiency related indicators. For sustainable profitable operations, cost of funding needs to be streamlined and meaningful diversification in risk exposures is required.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 506) at 021-35311861-70 or fax to 021-35311873.



Jamal Abbas Zaidi
Deputy 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 May 21, 2012 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.