Press Release

VIS Reaffirms Entity Ratings of Samba Bank Limited

Karachi, June 26, 2023: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Samba Bank Limited (‘SBL’ or ‘the Bank’) at ‘AA/A-1’ (Double A/A-One). Outlook on the assigned ratings is ‘Stable’. 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 high certainty of timely payment; liquidity factors are excellent and supported by good fundamental protection factors. Risk factors are minor. Previous rating action was announced on June 30, 2022.

The assigned ratings of SBL are underpinned by the strong profile of its sponsor, Saudi National Bank (SNB). Following the merger between National Commercial Bank, KSA and Samba Financial Group, the merged entity has rebranded itself and emerged as the largest bank in KSA, having an asset base of SAR 945.5b as at end-Dec 2022. This led to a change on the Board of Directors of the Pakistan based subsidiary, in turn followed by significant changes in the leadership and organizational structure with the objective of enhanced efficiency.

Given limited branch operations, SBL’s ability to attract low cost funding is limited. The Bank has strategically set out to deleverage the balance sheet and thereby maintain adequate liquidity and a low risk profile. Resultantly the advances portfolio has been declining as evident from Gross Performing Advances of Rs. 72.2b as of Mar’23 (Dec’22: Rs. 75.3b; Dec’21: Rs. 80.8). Likewise, the investment portfolio has decreased from corresponding year, and stands at Rs. 80.3b (Dec’22: 76.9%; Dec’21: Rs. 93.9b) as of Mar’23.

Meanwhile deposit mobilization has continued, with deposits increasing from Rs. 79.2b as of Dec’21 to Rs. 117.0b as of Mar’23, and resultantly the ADR has receded from 91% as of Dec’21 to 56% as of Mar’23. The liquid asset coverage of deposits and borrowings accordingly stood enhanced, indicating strong buffers at 53.4% (Dec’21: 32.8%) as of Mar’23.

Asset quality indicators of the Bank were impacted by Non-Performing Loans (NPLs) which have accounted for Rs. 5.6b (Rs. 5.2b in loss category) as of Mar’23. Moreover at end Q1’23, the Bank holds provision of Rs. 6.1b (including General Provision). Net infection is low, particularly in the context of risk buffers held. Going forward, given 1,125bps increase in benchmark rates over last 6 quarters ending June’23, concerns of potential increase in NPLs are emerging on a sector-wide basis highlighting greater focus on asset quality management.

On account of sale of financial securities and more significantly due to provisioning, SBL has incurred loss after tax in 2022. With the offloading of securities carrying high market risk, the potential for further mark to market losses stands lower. Higher spreads available to the Bank, will uplift core income and with continued expense control, the management expects a positive bottom-line in the current year.

SBL’s capital adequacy has declined since our last review. Profitability outlook has improved for the remaining year and given expectations of stagnant risk weighted assets, the Bank’s CAR is likely to recover. Overall, CAR is indicative of strong capitalization and higher than the median of its peers. SBL’s CAR is projected to remain in line with VIS benchmarks over the rating horizon.

For further information on this rating announcement, please contact the undersigned (Ext: 201) or Mr. Musaddeq Ahmed Khan (Ext: 216) at 021-35311861-64 or email at

Javed Callea

Applicable rating criterion: Financial Institution – June 2023
VIS Rating Scale:

1 Net of SBP borrowings

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 2023 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .