Press Release

VIS Maintains Entity Ratings of Zarai Taraqiati Bank Limited

Karachi, June 30, 2022: VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of Zarai Taraqiati Bank Limited (ZTBL) at ‘AAA/A-1+’ (Triple A/A-One Plus). Outlook on the rating has been revised from ‘Rating Watch-Developing’ to ‘Stable’. The medium to long-term rating of ‘AAA’ denotes highest credit quality, with negligible risk factors, being only slightly more than for risk-free debt of Government of Pakistan (GoP). The short-term rating of ‘A-1+’ denotes highest certainty of timely payment, liquidity factors are outstanding and safety is just below risk-free short-term obligations of Government of Pakistan. The previous rating action was announced on June 30, 2021.

The assigned ratings incorporate the strong and continuing implicit support of the State Bank of Pakistan and Government of Pakistan (GoP) being the shareholders of the Bank. The ratings also incorporate the fundamental role of ZTBL in the overall ecosystem of the country since the Bank remains the principal development financial institution used as an agricultural financing arm by the GoP.

The gross loan portfolio of ZTBL has been depleting on a timeline basis on account of lower disbursements amidst portfolio consolidation. During FY21, the Bank reported profit before tax, after being in loss for the last four years, on the back of improvement in internal control measures leading to higher recoveries and lower incidence of fresh infection. While infection ratios have exhibited some improvement on a timeline basis, the Bank’s asset quality remained compromised with limited loss absorption capacity as reflected by high net NPLs to Tier-1 equity. Meanwhile, liquidity has remained adequate with higher investments in government securities. Given considerable portion of PIBs are floating rate, market risk arising from the same is considered manageable. Capitalization has remained sound with CAR well above the regulatory requirement. Going forward, meeting recovery targets, improving asset quality indicators and maintaining liquidity and CAR at an adequate level will remain key rating sensitivities for the standalone strength and risk profile of the Bank.

The revision in ratings outlook take into account the withdrawal of the government guarantee on entire deposits of ZTBL available under Bank Nationalization Act 1974 (BNA), which has been replaced with Deposit Protection Scheme. However, the ratings factor in the socio-economic position of ZTBL as an important Rural Finance Institution and the continued support of its sponsors to deliver their targeted social objectives.

For further information on this rating announcement, please contact Ms. Tayyaba Ijaz, CFA at 042-35723411-13 (Ext. 8005) and/or the undersigned at 021-35311861-66 (Ext. 306) or email at

Faryal Ahmad Faheem
Deputy CEO

VIS Entity Rating Criteria: Government Supported Entities (July 2020)

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