Press Release

Ratings of Zarai Taraqiati Bank Limited

Karachi, April 5, 2012: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Zarai Taraqiati Bank Limited (ZTBL) at ‘B+/B’ (Single B Plus/Single B). JCR-VIS has also assigned ratings of ‘AAA/A-1+’ (Triple A/A-One Plus) to all government guaranteed debt and deposits mobilized by the bank. Outlook on the assigned ratings is ‘Stable’.

Ownership of the bank is held by the Government of Pakistan. The ‘AAA/A-1+’ ratings take into account the federal government guarantee on credit lines obtained from the State Bank of Pakistan (SBP) that form the predominant source of ZTBL’s funding. So far, the bank has not made any principal or mark-up payments on the premise that restructuring terms have not been finalized. Safety of deposits mobilized by the bank is guaranteed under the Banks’ (Nationalization) Act, 1974.

Entity ratings of ‘B+/B’ assigned to ZTBL reflect its financial position, without taking into account the impact of sovereign guarantee. ZTBL operates as a disbursing arm of the government in order to meet the funding requirements of small farmers. Loan pricing may need to be adjusted by taking into account the bank’s funding and operating cost to improve the bank’s earning profile and achieve financial and operational sustainability. Although ZTBL continues to focus on recovery of outstanding advances, delinquencies in the portfolio have increased, partly on account of flood related losses. Moreover, net NPLs as a percentage of tier-1 capital is also considered on the higher side.

For further information on this rating announcement, please contact Mr. Rashid Zahir at rashid.zahir@jcrvis.com.pk or Mr. Maimoon Rasheed at 042-36610681-84.



Jamal Abbas Zaidi
Deputy 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 2012 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .