Press Release
VIS Assigns Initial Entity Ratings to The Punjab Provincial Co-operative Bank Limited
Karachi, April 21, 2026: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings to The Punjab Provincial Co-operative Bank Limited (‘PPCBL’ or the ‘Bank’) of ‘AA-/A1’ (Double A minus/ A One). Medium to long term rating of 'AA-' indicates high credit quality; Protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. Short term rating of 'A1' indicates strong likelihood of timely repayment of short-term obligations with excellent liquidity factors. Outlook on the assigned ratings is Stable.
The Punjab Provincial Cooperative Bank Limited (‘PPCBL’ the ‘Bank’) was incorporated in 1924 as a Cooperative Bank under the repealed Cooperative Societies Act, 1912 (now the Cooperative Societies Act, 1925). It was given the status of a scheduled bank by the State Bank of Pakistan (SBP) with effect from November 07, 1955. The Bank is operating under the supervision of the Cooperative Department, Government of Punjab and the SBP. The principal activity of the Bank is to carry out the business of agriculture credit and other activities as defined in the Cooperative Societies Act, 1925 and its Rules. The Bank is predominantly owned by the Government of Punjab, which holds a controlling stake of approximately 95%. The remaining shares, around 5%, are held by various cooperative societies.
The assigned ratings reflect the ownership structure of Punjab Provincial Cooperative Bank Limited (‘PPCBL’ the ‘Bank’), with majority shareholding and support from the Government of Punjab, providing high degree of support and stability. The latest reflection of financial support was a PKR 6.2b injection approved by the Punjab cabinet, of which PKR4bn has been disbursed in Q3FY26. The governance framework is supported by an experienced board and management team, enabling oversight and implementation of business strategy.
The financial restructuring of the Bank follows a rejuvenation of the institutional mandate for funding towards rural development in the largest province of Pakistan, which entailed a change in management, modernization of the organizational layout entailing new departmental heads with experience in commercial banking, an update to policies and procedures as well as technology upgrade. An important development in this regard is the planned Voluntary Separation Scheme (VSS), which would reorganize the field staff and teams for reinvigorated efforts towards funds deployment. While this entails upfront cost funded through the recent equity injection, it aims to rationalize delivery cost over future business development.
The Bank maintains a presence in agricultural financing with a secured lending portfolio and recent growth in advances. Asset quality indicators have improved, supported by write-offs against past non-performing loans and contained incidence of new infection, although new lending is both limited and relatively unseasoned. The investment portfolio is dominated by government securities, which supports the overall risk profile.
Liquidity remains adequate and compliant with regulatory requirements, with sizable liquid assets providing a buffer against any liquidity pressures. The funding structure is backed by cooperative pension and provident fund deposits, which tend to be stable and long-term. PPCBL’s superior access to government funds is exemplified by the institution’s exemption from minimum rating requirements, generally applicable, further reinforces the extent of sponsor support. Consistent with the rating methodology, the assigned ratings incorporate notching based on support from the Government of Punjab. Capitalization remains a key strength, with buffers maintained above regulatory requirements.
Profitability has moderated in the recent period due to changes in the interest rate environment and higher operating expenses, though core income streams remain stable. Ongoing investments in systems, operations and the planned VSS are expected to support efficiency over time. As business growth picks up, we expect profitability momentum to build gradually.
Going forward, the rating is sensitive upon the Bank’s ability to improve its earning asset mix, mobilize a larger cost-effective funding base to sustain future growth, sustained asset quality and strengthen profitability while maintaining adequate provisioning levels.
For further information on this ratings announcement, please contact on 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria:
Financial Institutions
https://docs.vis.com.pk/Methodologies%202024/Financial-Institution-v2.pdf
Government Supported Entities
https://docs.vis.com.pk/Methodologies-2025/GSEntities.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf