Final PR
The Pakistan Credit Rating Agency Limited

Jhangeer Hanif

Faraan Taimoor

Applicable Criteria

  • Rating Modifiers | Outlook and Rating Watch (Jun 16) [View]

Related Research

  • Sector Study | Commercial Bank (Jun 17) [View]
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PACRA Maintains Ratings of Bank Al Habib Limited
 Rating Type Entity Debt Instrument
 Action Maintain Maintain
 Long Term AA+ AA
 Short Term A1+
 Outlook Stable Stable
 Rating Watch - -

The ratings reflect the bank's sustained performance, exceptional asset quality, satisfactory financial profile and strong liquidity. The bank has solidified its relative positioning in the universe of large sized banks with maintained share in the country's customer deposits ; slightly up in 1Q17. The bank continued with its strategy for outreach expansion - adding significant branches every year. The strength of the bank is reflected in the high proportion of retail deposits in the total : concentration is low and hence reduced risk. Trade finance is the bank's hallmark yet the bank is building alternative revenue streams, while exploring opportunities in CPEC related projects. The ratings draw comfort from bank's experienced management team, prudent risk management policies and deep rooted relationship with clients - borrowers as well as depositors.

The ratings are dependent on the bank's sustained risk profile. In the wake of heightened competition, profitable growth is a challenge while retaining the relative positioning in the industry. The equity base of the bank and CAR are satisfactory , and may need to be enhanced in view of the expected growth in loans and advances.
About the Entity
BAHL, incorporated in Oct 1991, operates with a network of 612 branches /sub-branches, including 41 Islamic banking branches at end-Mar17. The sponsors of BAHL are members of the Habib family - one of the oldest and most distinguished names in Pakistan's banking sector. At end-Dec16, BAHL represents ~5.2% (CY15 ~5.2%) of the total banking deposits.

BAHL's ten-member BoD includes four representatives of Habib family and three independent members. Mr Mansoor Ali Khan, the bank's CEO, was appointed CEO in Nov-2016 and has been associated with the bank for over twenty years. He is backed by a team of experienced professionals, most of whom have long association with the bank.

About the Instrument
At end-Mar17, BAHL has one unlisted TFC of PKR 4,000mln. TFC V was issued in Mar-16 at 6M-KIBOR Plus 75bps p.a. payable semi-annually in arrears. The tenor of this instrument is 10 years, callable in Mar-21 or thereafter with prior approval of SBP.
The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.