Press Release

JCR-VIS revises Ratings of Summit Bank Limited

Karachi, November 23, 2018: JCR-VIS Credit Rating Company Limited (JCR-VIS) has revised the entity ratings of Summit Bank Limited (SBL) from ‘A-/A-1’ (Single A Minus/A-One) to ‘BBB-/A-3’ (Triple B Minus/A-Three). Rating of the outstanding TFC-1 has also been revised to ‘BBB-’ (SO) (Triple B Minus (Structured Obligation)). Ratings have been placed on ‘Rating Watch-Negative’ status in view of weakening financial profile and delay in potential merger with another Commercial Bank. Previous rating action was announced on July 10, 2018.

SBL and another commercial bank had 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 Adequacy Ratio (CAR) was expected to be resolved with the planned merger. However, given the un-expected delay in the merger, financial profile of the Bank is weakening as evident from significant deterioration in capitalization profile, persistent trend in operating losses and weak asset quality indicators. A continuation of this trend will result in further downward pressure on the assigned ratings. In view of pending merger, last published financial statements for the Bank are for the period ended-March’2018. Weakening in key risk indicators is also evident from lock-in-clause being invoked on outstanding TFC to avoid further deterioration in financial profile. A revised maturity date with all other terms and condition remaining the same has been approved by TFC holders representing not less than 51% of the total voting rights.

For further information on this rating announcement, please contact Talha Iqbal (Ext: 213) or 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

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