Press Release
VIS Reaffirms Entity Ratings of Pak China Investment Company Limited
Karachi, June 30, 2025: VIS Credit Rating Company Limited (VIS) has re-affirmed the entity ratings of Pak China Investment Company Limited (‘PCICL’ or the ‘Company’) at ‘AAA/A1+’ (Triple A/A One Plus). Medium to long-term rating of ‘AAA’ denotes highest credit quality; the risk factors are negligible, being only slightly more than for risk-free Government of Pakistan’s debt. Short-term rating of ‘A1+’ denotes strongest likelihood of timely repayment of short-term obligations with outstanding liquidity factors. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on June 28, 2024.
PCICL was incorporated in Pakistan as a public limited Company in 2007. PCICL operates as a Development Financial Institution (DFI) under a Joint Venture (JV) agreement between the Government of Pakistan (GoP) and People’s Republic of China (PRC); shares of PCICL are equally held by GoP through Ministry of Finance (MoF) and PRC through China Development Bank (CDB). PCICL was established to act as a bridge for promotion of bilateral trade and investment between the two sponsor sovereigns and with an objective of financing economically viable and technically feasible projects.
Entity ratings assigned to PCICL reflect the institution’s strong ownership structure. As a joint venture between the GoP and the PRC, PCICL benefits from both sovereign support and strategic alignment with bilateral economic initiatives. VIS also takes into account the high international scale credit ratings assigned to PRC.
PCICL maintains a strong capital base, comprised solely of Tier-1 capital, well above the regulatory minimum, which provides a significant buffer against potential losses and supports future growth. Liquidity indicators also remain healthy, with liquid assets comfortably covering deposits and borrowings, and stable funding metrics highlighting a sound balance sheet structure. The Company’s investment strategy, focused on short-tenor government securities, underscores its conservative approach to credit and market risk, while maintaining portfolio flexibility.
Despite sector-wide challenges, PCICL has demonstrated resilience in profitability. Although interest margins have slightly narrowed in a declining rate environment, core profitability remains intact, supported by disciplined cost control and conservative provisioning. Recent declines in net income are considered cyclical and linked to macroeconomic factors. The Company has outlined a shift back to long-term lending, aimed at reducing earnings volatility and supporting sustainable income streams.
Credit risk is elevated due to concentration in a few sectors and clients, though this is partially mitigated by the institution’s continued emphasis on lending to top-tier corporates and participation in strategic national projects. Asset quality remains manageable, although non-performing loans have increased modestly, primarily due to stress in specific sectors such as steel manufacturing. Provisioning levels remain sufficient, with incremental adjustments made to reflect evolving portfolio risks.
Organizational stability remains an area for improvement, with notable senior management turnover during the review period. Nonetheless, efforts to enhance risk governance frameworks and adopt digital systems for loan origination signal a forward-looking operational strategy. Going forward, the ongoing enhancements in governance, risk management, and operational resilience will be critical in sustaining the assigned ratings amidst evolving market dynamics and policy shifts.
For further information on this ratings 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
https://docs.vis.com.pk/Methodologies%202024/Financial-Institution-v2.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf