Press Release

JCR-VIS maintains ratings of The Bank of Khyber at BBB+

Karachi, July 6, 2009: JCR-VIS Credit Rating Co Ltd. has maintained the medium to long term rating of The Bank of Khyber (BoK) at ‘BBB+’ (Triple B Plus). Outlook on the ratings is ‘Stable’.

BoK has directed recent efforts to improve its IT infrastructure, strengthen credit administration, including revamping MIS and inducting human resource at senior level. However, BoK confronts unusual challenges of being a market player with major operations in NWFP. The unstable law and order situation and prevailing insurgency in the province have made the overall environment difficult. Consequently, the bank faces an uphill task in achieving growth, while conforming to prudent standards of underwriting business. The management’s increasing focus towards expanding in other provinces, is likely to partly address these concerns.

In a hostile economic environment, banks in general have posted deterioration in asset quality indicators. BoK was not an exception. Going forward, provisioning requirements coupled with recognition of impairment losses on available for sale investments would continue to impede profitability; at least in the current year. The bank’s deposit access is also limited and available funds feature high concentration. Resultantly, the short-term rating has been revised to ‘A-3’ (A-Three) from ‘A-2’ (A-Two).

Given the regulatory requirement to enhance the paid-up capital to Rs. 6b by end of FY09, the sponsors are exploring various alternatives and the final plan is expected to emerge soon. The Government of NWFP is likely to maintain its major shareholding in the bank.

For further information on this rating announcement, please contact Ms. Sabeen Saleem (sabeen@jcrvis.com.pk) at (92-21) 35311861-10 (10lines) or fax to (92-21) 35311873.



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 2009 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .