Press Release

Ratings of Summit Bank Limited

Karachi, June 29, 2018: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Summit Bank Limited (SBL) at ‘A-/A-1’ (Single A Minus/A-One). Rating of the outstanding TFC-1 has also been reaffirmed at ‘A- (SO)’ (Single A minus (Structured Obligation)). Ratings continue to be placed on ‘Rating Watch-Developing’ status in view of potential merger with another Commercial Bank. Previous rating action was announced on June 30, 2017.

The reaffirmation in ratings incorporate firm commitment of the sponsor (Suroor Investments Limited) to provide required amount of capital for complying with applicable regulatory requirements on or before 31st December 2018 in case the Board of Directors decide not to pursue the proposed merger option. The ratings draw comfort from demonstrated track record of the sponsor in this regard. However, in case of non-compliance with regulatory capital requirements beyond December’2018, the ratings may face downward pressure.

SBL and another commercial bank have decided to consider the potential merger of the two institutions, subject to approval of State Bank of Pakistan and applicable corporate and regulatory compliances. The regulatory short fall in capital requirements is expected to be resolved with the planned merger. The Liquidity profile of the Bank is adequate and Liquidity Coverage Ratio and Net Stable Funding Ratio were well above regulatory requirements. However, financial profile of the Bank has weakened as evident from deterioration in capitalization profile, incurrence of operating losses and weak asset quality indicators. To address these issues, the management is implementing the devised business plan, including focus on realizing gain on sale from the partial disposal of a property held on the balance sheet of the Bank, improvement in earnings stream, rationalization of operating costs and recovery from non-performing clients to support income and capitalization levels. It is also pertinent to mention that the Bank has registered decline in operating losses during 1QCY18.

For further information on this rating announcement, please contact the undersigned (Ext: 201) at (+92-21) 35311861-70 or fax to (+92-21) 35311872-3.

Javed Callea
Advisor

Applicable rating criterion: Commercial Banks Methodology - March 2018 http://jcrvis.com.pk/docs/Meth-CommercialBanks201803.pdf

Rating the Issue (Sept 2014) http://www.jcrvis.com.pk/Images/criteria_instrument.pdf

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 2018 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .