Press Release

JCR-VIS Reaffirms Entity Ratings of Al Baraka Bank (Pakistan) Limited at A/A-1

Karachi, June 28, 2013: JCR-VIS Credit Rating Company Limited has reaffirmed the entity ratings of Al Baraka Bank (Pakistan) Limited (ABPL) at ‘A/A-1’ (Single A/A-One). Outlook on the assigned ratings is ‘Stable’.

Ratings take into account the bank’s sound liquidity profile, as reflected in an improving deposit mix, which now comprises a greater proportion of retail and CASA deposits. The bank has shed off high cost term deposits. Resultantly, there has been a notable improvement in cost of deposits in 2012 and the on-going year. Improvement is also warranted in deposit concentration levels.

Financing portfolio has witnessed marginal growth in the on-going year. While fresh lending, post merger, has largely been against established names; overall portfolio quality has room for improvement. The management has successfully re-activated earnings from select non-performing clients during the on-going year. This is likely to improve portfolio quality indicators.

As an Islamic financial institution with most assets being re-priceable, the bank is exposed to a greater degree of re-investment risk vis-à-vis its conventional counterparts. At the same time, removal of floor on return on saving deposits offers greater flexibility in managing cost of deposits. ABPL plans to further rationalize cost of deposits and grow its financing portfolio in order to enhance core earnings. Moreover, successful realization of recovery drive against NPLs is likely to reduce the drag on earnings, going forward.

The ratings assigned to ABPL take into account implicit support of the major sponsor, which is part of the Al Baraka Banking Group. Recently, ABPL has submitted a capitalization plan to the State Bank of Pakistan. Once finalized, the same is expected to allow the bank to meet minimum capital requirement over time and create room for future growth.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 604) at 92-21-35311861 or fax to 92-21-35311873.



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 2013 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .