Press Release

VIS Reaffirms Entity Ratings of Pak Oman Investment Company Limited

Karachi, June 30, 2021: VIS Credit Rating Company Limited has reaffirmed the entity ratings of Pak Oman Investment Company Limited (POIC) at ‘AA+/A-1+’ (Double A Plus/A-One Plus). The long term rating of ‘AA+’ signifies high credit quality, protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. The short-term rating of ‘A-1+’ signifies highest certainty of timely payment; short-term liquidity, including internal operating factors and/ or access to alternative sources of funds, is outstanding and safety is just below risk free Government of Pakistan’s short-term obligations. Outlook on the assigned ratings is ‘Stable’ Outlook. The previous rating action was announced on June 30, 2020.

The assigned ratings draw comfort from POIC’s joint venture shareholding structure with shares equally vested between the Government of Pakistan and Sultanate of Oman through their respective finance ministries. S&P Global has assigned sovereign ratings of ‘B+/B-’ with ‘Stable’ outlook to Sultanate of Oman. The sponsors of the company have historically demonstrated financial support to POIC, and VIS expects the support to prevail going forward if need arises.

During FY20; while advances growth remained subdued, asset base grew on the back of increase in investment portfolio funded through growth in borrowings. Focus remained on consolidation of financing portfolio. Consequently, sector concentration increased. Advances quality remained under pressure amid challenging economic environment. Investment portfolio remains heavily invested in Government securities. While credit risk emanating from long term investment portfolio is low, exposure to market risk increased.

Overall liquidity profile improved and is considered sound in view of adequate liquid assets in relation to deposits and borrowings, and regulatory compliant Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR).

Profitability indicators depict improvement during FY20 on account of higher net interest income and gain on sale of securities. Going forward, profitability is expected to remain under pressure due to challenging economic environment. Capitalization indicators improved in 2020 on account of increase in total eligible capital in relation to growth in risk weighted assets; and remained above the regulatory requirement.


For further information on this rating announcement, please contact the undersigned (Ext: 201) or Ms. Sara Ahmed (Ext: 207) at 35311861-66 or email at info@vis.com.pk.


Javed Callea
Advisor

VIS Entity Rating Criteria: Government Supported Entities (June 2016)
http://vis.com.pk/kc-meth.aspx

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 2021 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .