Press Release

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

Lahore, June 28, 2024: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Saudi Pak Industrial and Agricultural Investment Company Limited (‘Saudi Pak’ or ‘the Institution’) 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 23, 2023.

The assigned ratings derive support from the strong shareholders’ profile, with two sovereigns, Government of Pakistan and Kingdom of Saudi Arabia (KSA), having an equal stake in the Institution under the terms of a joint venture agreement. KSA has outstanding sovereign ratings of ‘A’ and ‘A+’ from global credit rating agencies.

The gross advances portfolio slightly increased over the rating review period owing to the Institution’s cautious lending strategy amidst the challenging macroeconomic environment. Given improved recoveries against NPLs as well as substantial provisioning in line with IFRS-9 adoption, gross and net infection levels depicted improvement during CY23. The management is working towards the resolution of an impairment recognized in the first quarter of CY24 along with other recoveries by end-Dec’24; materialization of the same would be important. The investment portfolio continues to comprise largely of government securities resulting in minimal associated credit risk. Meanwhile, market risk is moderated given that majority of the same constitute floating-rate instruments.

Overall, liquidity profile is adequate with liquidity coverages in sync with median of peers. The ratings also take into account improvement in bottom-line profitability during the outgoing year; however, the same is largely attributable to market driven gains on stocks portfolio and fee & commission income increased during CY23. Moreover, the Capital Adequacy Ratio (CAR) continued to remain comfortably above regulatory requirements and the peer median. Going forward, the ratings will remain sensitive to improvement in profitability and asset quality metrics while maintaining liquidity profile and capitalization levels.

For further information on this ratings announcement, please contact at 042-35723411-13 or email at info@vis.com.pk.



Applicable rating criterion: Financial Institution
https://docs.vis.com.pk/Methodologies%202024/Financial-Institution-v2.pdf

Applicable Rating Criteria: Government Supported Entities
https://docs.vis.com.pk/docs/Meth-GSEs202007.pdf

VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

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 2024 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .