Press Release

VIS Reaffirms Ratings to Dubai Islamic Bank Pakistan Limited

Karachi, June 29, 2022: VIS Credit Rating Company Ltd. (VIS) has reaffirmed entity ratings of ‘AA/A-1+’ (Double A /A-One Plus) to Dubai Islamic Bank Pakistan Limited (DIBPL). Outlook on the assigned ratings is ‘Stable’. The rating assigned to the Bank’s Tier II Sukuk and Additional Tier I (ADT-1) Sukuk has been reaffirmed at ‘AA-’ (Double A Minus) and ‘A+’ (Single A Plus) respectively. The previous entity rating action was announced on June 30, 2021.

Ratings assigned to DIBPL incorporate sound profile and demonstrated track record of the sponsor, Dubai Islamic Bank (DIB), the largest Islamic bank operating in UAE. In August 2021, DIB was upgraded to ‘A+/A-1’ (Single A Plus/A-One) by Islamic International Rating Agency (IIRA), reflecting the completion of integration with Noor Bank, strong organic asset growth, maintenance of asset quality and better than peers’ profitability indicators.

In 2021, DIBPL asset base recorded steady growth, fairly in line with last year, led by increase in deposit base and borrowings. While asset mix over time depicts a shift towards investment portfolio, Advances to Deposit Ratio (ADR) remains on the higher side, relative to peers. Financing portfolio in 2021 grew slightly lower than the industry, leading to a nominal change in market share. Exposures comprise of largely private sector, mid-tier clients, concentrated in Textiles, Food & Beverages and Power and Oil and Gas sectors. Asset quality indicators have recorded a decline over time, although they remain better than peer average. Going forward, on account of heightened credit risk environment and large private sector ADR of the Bank, we expect credit risk of the financing portfolio to remain elevated. On the other hand, credit and market risk emanating from investment portfolio is considered manageable given sizable exposure in securities featuring sovereign guarantee and majority parked in floating instruments.

Deposits of the Bank grew fairly and maintained its deposit market share. Deposits growth largely emanated from increase in low cost current and savings deposits which is viewed favorably from ratings perspective. Cost effective funding base together with cost-efficient structure of the Bank vis-à-vis its peer average provides comfort to ratings. Liquid assets to Deposit and Borrowings, however remain adequate and presents room for improvement in line with peer average.

DIBPL’s profitability in 2021 was supported by growth in non-markup income and one off capital gains incurred on sale of securities, which was partly offset by additional general provisioning booked by the bank. Equity base continued to record improvement supported by higher capital generation and full profit retention. DIBPL’s capital adequacy remains adequate, at present, in view of the quantum of cushion above the minimum requirement, albeit depict a decline on a timeline basis. Going forward, recuperation in capital adequacy levels, in line with the assigned benchmarks as well as maintenance of asset quality and profitability metrics and continued improvement of liquidity metrics is considered important from a rating perspective.

For further information on this rating announcement, please contact Ms. Nisha Ahuja, CFA or the undersigned (Ext: 207) at (021) 35311861-66 or email at

Sara Ahmed

Applicable Rating Criteria: Commercial Banks Methodology (June 2020)

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 2022 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

VIS Credit Rating Company Limited