PACRA Maintains Ratings of First Women Bank Limited
The
Pakistan Credit Rating Agency (PACRA) has maintained thelong-term and
short-term entity ratings of First Women Bank Limited (FWBL) at"A-"
(Single A Minus) and "A2" (A two), respectively. These ratings denote a
low expectation of credit risk while the capacity for timely payment of
financial commitments is considered strong.
The
ratings primarily reflect majority ownership of the bank by Government
of Pakistan (GoP), which has gradually increased its shareholding
through fresh capital injection. The bank's standalone performance is
under pressure; weak risk management parameters and rising concentration
risk has led to an increase in the bank's non-performing loans and thus
deteriorated its profitability. FWBL's small size and limited outreach
pose constraints to its growth. Meanwhile, it is non-compliant with the
regulatory requirement of capital for which the bank has availed an
extension. The ratings are dependent upon the bank's ability to
strengthen its standalone standing, mainly by
(i) improving its risk management framework,
(ii) attaining sustainable profitability, and
(iii) strengthening of technological platform. Meanwhile, any further lapse in asset quality may exert pressure.
The
clarity from the government - the main sponsor - regarding the capital
of the bank and the role it should play in the economy would facilitate
them anagement in designing and following a comprehensive strategy.
About The Bank:
Formed in 1989, FWBL's mandate is to cater to the special banking needs
of women in Pakistan. FWBL operates through a network of 41branches
(end Mar-13) spread over 24 cities nationwide.Government of Pakistan
owns majority stake, 58.8% through Ministry of Finance and NBP (at
end-11: 48.4%), in the bank. The remaining stake is held by the four big
commercial banks - HBL, MCB, UBL, and ABL. The President
of
the bank is appointed by the Federal Government. Lately, the BoD has
been reconstituted, whereby there are seven directors, four from GoP
(Ministry of Finance), one each from MCB and HBL, and one joint nomiee
from ABL, NBP, and UBL. Ms. Charmaine Hidayatullah, the acting President
of the bank, has been with the bank for over 20 years. She is supported
by a team of experienced professionals.
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