Press Release

Ratings of Silk Bank Limited

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Karachi, October 22, 2012: JCR-VIS Credit Rating Company Limited has maintained the medium to long-term entity rating of Silk Bank Limited (SBL) at ‘A-’ (Single A Minus). Short-term term rating has been adjusted from ‘A-2’ (A-Two) to ‘A-3’ (A-Three). Ratings continue to be placed under ‘Rating Watch-Developing’ status.

The bank remains short of the regulatory minimum capital requirement and capital adequacy ratio. To address the regulatory shortfall, the bank is soliciting investors for issuance of perpetual, non-cumulative, convertible preference shares; product structure for the transaction has been approved by the State Bank of Pakistan. The preference shares will be eligible as tier-1 capital. Equity injection is necessary for improving the risk profile of the institution.

The bank carries a sizeable amount of non-earning assets, which place significant drag on earnings. The management is pursuing a multi-pronged strategy to improve core earnings. JCR-VIS will closely track the implementation of this strategy. The bank has posted an overall profit for 2011 and for 1H2012 on the back of recoveries.

For further information on this rating announcement, please contact Ms. Sobia Maqbool, CFA (Ext: 604) at 35311861-70 or fax to 35311873.



Abdur Rahim, ACII
Advisor

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