Press Release

JCR-VIS Reaffirms Ratings of Saudi Pak Industrial and Agricultural Investment Company Limited at AA+/A-1+

Karachi, June 28, 2010: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the medium to long-term entity rating of Saudi Pak Industrial and Agricultural Investment Company Limited (SAPICO) at ‘AA+’ (Double A Plus) with a ‘Stable’ Outlook. Short-term rating has also been reaffirmed at ‘A-1+’ (A One Plus).

SAPICO is a joint venture between the Government of Pakistan and Kingdom of Saudi Arabia. The ratings assigned incorporate the implicit support of the two sovereign countries. The Kingdom of Saudi Arabia is rated ‘AA-/Stable/A-1+’ by a global credit rating agency.

The pressure on secondary market borrowers continued through FY09, given the low credit appetite and rising NPLs. In this scenario, SAPICO registered a decrease in the advances portfolio while channeling funds towards money market avenues. However, the company has embarked upon arresting the decline in lending operations. Considering the limited options for funds deployment, the DFI adjusted its borrowing mix by reducing relatively expensive borrowings that in turn had a positive impact on the cost of funds. While the company made additional provisioning in view of deteriorating asset quality, profitability largely remained a function of stock market performance. The management is endeavoring to improve the existing infrastructure of risk management and controls; however, there is still room for further improvement, particularly in the area of information technology.

The liquidity profile of the company has improved vis-à-vis total borrowings. Nevertheless, access to diversified funding sources through COIs is desirable for growth.

For further information on this rating announcement, please contact Ms. Sabeen Saleem (Ext: 510) at 0213-5311861-72 (12 lines) or fax to 0213-5311873 or Mr. Maimoon Rasheed at 0423-6610681-84 (4 lines).



Safdar Kazi
Director

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