Press Release

VIS Reaffirms Entity Ratings of Pak Oman Investment Company Limited

Karachi, June 28, 2022: VIS Credit Rating Company Ltd. (VIS) has reaffirmed entity ratings of Pak Oman Investment Company Limited (POIC) at ‘AA+/A-1+’ (Double A Plus/A-One Plus). The long term rating of ‘AA+’ signifies high credit quality, protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. The short term rating of ‘A-1+’ signifies highest certainty of timely payment; short term liquidity, including internal operating factors and/or access to alternative sources of funds, is outstanding and safety is just below risk free Government of Pakistan’s short-term obligations. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on June 30th, 2021.

Assigned ratings continue to derive strength from sovereign sponsor profile. POIC is a joint venture between the Government of Pakistan and Sultanate of Oman through their respective institutions namely; Ministry of Finance, Pakistan and Oman Investment Authority, Sultanate of Oman. S&P Global has revised upwards sovereign ratings to Sultanate of Oman to ‘BB-’ from ‘B+’ , citing higher oil prices, rising hydro carbon production and the government’s fiscal reform programme.

Financing portfolio, which forms less than one-fifth of the total assets remains concentrated in Textiles, Power, Transportation and Storage and Services sector. Client concentration is on the higher side. Going forward, while management intends to continue to take up a cautious lending stance, we may expect some pressure on asset quality metrics given heightened credit risk environment. Maintaining asset quality indicators in line with rating benchmarks is considered important from ratings perspective.

Exposure to credit risk emanating from investment portfolio, which accounts for four-fifth of the total asset base, remains low given sizable portion is vested in Federal government securities. Market risk on the portfolio is also limited with majority comprising of shorter re-pricing tenure instruments and floating coupon PIBs. Borrowing led asset growth exposes the balance sheet to mismatch risk, which for now remains manageable.

Profitability of POIC reverted to past few years’ average in 2021; excluding 2020 where profitability stood much higher on account of one-off capital gain incurred. Going forward, we expect some spread compression due to time lag between repricing of assets vis-a-vis funding sources. Moreover, given higher credit risk environment, additional provisioning may constrain future profitability, although higher investment income may provide support to overall profitability.

Capitalization levels remain at an adequate level and in line with the regulatory requirements. Nevertheless, with a higher Net NPLs to Tier 1 Capital, credit risk profile remains elevated. Moreover, arresting decline in asset quality and liquidity indicators would be important going forward. In addition, maintenance of capitalization buffers in line with the benchmarks for the assigned ratings will remain important for ratings.

For further information on this rating announcement, please contact Ms. Nisha Ahuja, CFA or the undersigned (Ext: 306) at (021) 35311861-66 or email at

Faryal Ahmad Faheem
Deputy CEO

Applicable Rating Criteria: Government Supported Entities (July 2020)

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