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The Pakistan Credit Rating Agency Limited

Date
30-Dec-2017
Analysts
Jhangeer Hanif
jhangeer@pacra.com

Faraan Taimoor
faraan.taimoor@pacra.com

+92-42-35869504
www.pacra.com
Applicable Criteria

  • Methodology | Bank Rating (Jun 17) [View]

Related Research

  • Sector Study | Commercial Bank (Jun 17) [View]
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PACRA Maintains Entity Ratings of Habib Metropolitan Bank Limited
 Rating Type Entity
Current
(30-Dec-2017)
Previous
(23-Jun-2017)
 Action Maintain Maintain
 Long Term AA+ AA+
 Short Term A1+ A1+
 Outlook Stable Stable
 Rating Watch - -

The ratings incorporate HabibMetro's association with a diversified and financially strong international bank - Habib Bank AG Zurich (HBZ). This association helps in assimilating the parent's best practices into HabibMetro, while fostering control environment with enhanced level of oversight. The ratings recognize the bank's healthy financial profile reflected in its strong CAR. The bank has experienced downtrend in profitability which will remain a challenge in days to come. With dynamic competition in the market, holding onto a sustained market share (deposits and advances) with profitable growth has become increasingly difficult. The bank’s strategy envisages re-orientation of the bank towards supply chain. The bank experienced relatively high infection compared to most peers, though these are considerably covered. NPL's are high; management's efforts must translate in sustained asset quality - indeed improvement. The bank needs to diversify its deposit base.

The ratings are dependent on the management's ability to augment its position generally in the banking industry and particularly in its market niche - trade finance. Any weakening in asset quality will in turn put pressure on the bank's profitability and risk absorption capacity
About the Entity
HabibMetro, commencing operations in 1992, is listed on Pakistan Stock Exchange. The bank is a 51% owned subsidiary of HBZ. HBZ, incorporated in Switzerland in 1967, is owned and managed by the Habib family. HabibMetro makes substantial contribution towards consolidated assets of Habib Bank AG Zurich. HabibMetro has a nationwide network of 320 branches including 29 Islamic branches, spread over 94 cities.

The nine member board comprises CEO along with two representatives of HBZ, three independent directors and three non-executive directors . The CEO, Mr. Sirajuddin Aziz, carries experience of over three decades in domestic and international banking industry. A professional team of senior executives assists the Chief Executive
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.
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