Press Release

VIS Reaffirms Ratings of Saudi Pak Industrial and Agricultural Investment Company Limited

Karachi, June 28, 2022: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Saudi Pak Industrial and Agricultural Investment Company Limited (SAPICO) at ‘AA+/A-1+’ (Double A Plus/A-One Plus). The medium to long-term rating of ‘AA+’ denotes high credit quality, with strong protection factors. Moreover, risk factors are modest but may vary slightly with possible changes in the economy. 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. Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on June 11, 2021.

Ratings assigned to Saudi Pak Industrial and Agricultural Company Limited (Saudi Pak) take into account its strong shareholders’ profile, with two sovereigns, Government of Pakistan (GoP) and Kingdom of Saudi Arabia (KSA), having an equal stake in the company under the terms of a joint venture agreement. KSA has outstanding international rating of ‘A-’ from a global credit rating agency.

Despite recovery post COVID-19, the Company maintained a cautious lending strategy with advances portfolio recorded lower in the review period. Going forward, prudent advances growth is targeted by tapping Tier 1 and Tier II clients, largely relating to project financing. Overall asset quality indicators improved in the review period due to de-classification of certain clients. Non-performing portfolio (NPL) on the books, reduced by 39% and NPLs coverage ratio increased from 65% to 94% reflecting significant improvement on net infection levels. Ratings, however, remain constrained on account of relative size of legacy NPL portfolio vis-à-vis peers.

Investment portfolio comprises of exposure in mainly Pakistan Investment Bonds (PIBs), on which credit risk is considered low. The investment strategy entails exposure in primarily floating rate PIBs which constituted 73% of overall portfolio. Fixed rate PIB portfolio remains exposed to higher market risk which the management intends to rationalize, going forward. Given challenging economic environment, operating profit in 2021 was recorded highest among its peer group, supported by higher spreads, dividend income and reversal in provisioning charges on advances portfolio due to which PBT was 66% higher in comparison to previous year.

Long-term investment portfolio is primarily funded through short-term repo borrowings. Overall, liquidity profile has strengthened with sufficient coverage against deposits and borrowings, in line with peers. Maintenance of the same will remain important for ratings. Ratings review also notes improvement in Capital Adequacy Ratio (CAR) with reduction in Risk Weighted Assets being contributed by lower credit and market risk. Nevertheless, going forward, given the ongoing high credit risk environment, we expect pressure on asset quality indicators. Managing the same without causing a strain on profitability will remain important for ratings.

For further information on this rating announcement, please contact Ms. Asfia Aziz (Ext: 212) and/or the undersigned at 021-35311861-66 (Ext. 207) or email at

Sara Ahmed

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

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