Press Release

JCR-VIS reaffirms the ratings of Bank of Khyber at BBB/A-2

Karachi, June 15, 2006: JCR-VIS Credit Rating Company Limited has reaffirmed the ratings of the Bank of Khyber (BoK) at BBB/A-2 (Triple B/ A- two). The outlook on the rating is ‘Stable’. The rating agency has noted the increase in equity of BoK, having been listed on the Karachi Stock Exchange during the first quarter of 2006 to meet its minimum paid-up-capital requirement (MCR). The Government of North West Frontier Province now holds approximately 65% of the shareholding in the bank while another 9% currently held by Deutsche Investitions-und-Entwicklungsgesellschaft mbH is expected to soon be disinvested.

The bank has increased provisions against NPLs as a result of revised prudential regulations. However the bank has successively reduced net infection from 33.26% (FY03) to 12.5% (FY05) over the past 2 years. The level of business and profitability has been maintained at an adequate level by the existing management although it has lagged growth in the banking sector due to the non-expansion of branch network. The appointment of permanent management at the senior most level and its continuity, in addition to obtaining permission to expand branch network, will be instrumental in steering the bank forward. Given projected profitability assessments, JCR-VIS has been conscious of the requirement to continually increase capital in line with the directives of the State Bank of Pakistan, which might also require the provincial government to inject additional equity in the future to maintain its strategic shareholding.

For further information on this rating announcement, please contact Mr. Safdar Kazi (Ext: 233) or Ms. Sabeen Saleem (Ext: 222) at 5671822/5671833/5680996 or fax to 5681105/5671600.



Faheem Ahmad
President & CEO

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 2006 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .