The Pakistan Credit Rating Agency
(PACRA) has maintained the long-term and short-term entity ratings of
BankIslami Pakistan Limited(BIPL) at "A" (Single A) and "A1"
(A One) respectively. These ratings denote a low expectation of credit risk
emanating from a strong capacity for timely payment of financial
commitments. Meanwhile, "Positive Outlook" has been assigned to these
ratings.
The ratings reflect BIPL's strong
business profile characterized by sustained performance, expanding outreach,
and well equipped technology infrastructure.
The bank's revenues largely flow from fund based avenues, while the
contribution of non-fund based income, though improving, is limited. Sound
asset quality remained a key contributor in the stable performance of the bank.
The management aims higher deposit mobilization, wherein significant branch
expansion is being rolled out. Credit growth would be cautious, mainly targeted from selected top-tier clientele,
while continuing to deploy excess liquidity in government securities. Given the
challenging operating environment and competitive banking landscape, effective
implementation of business strategy is
challenging.
The positive outlook on the ratings
recognize the bank's potential to, i) meet regulatory capital requirements, ii)
achieve an optimal operational size, while enhancing overall system share, iii)
continue improving trend in profitability,
while upholding existing asset
quality, and iv) diversify revenue streams, particularly from non-fund based
avenues. Meanwhile, retention and development of key management team while
institutionalizing systems and processes to strengthen the operations of the
bank would remain critical.
About the Bank
BIPL, a scheduled Islamic bank, commenced
operations in Apr-06 and is listed on
the Karachi Stock Exchange. The bank is a joint venture among three business
groups, holding a cumulative 65.4% stake, namely DCD Group UK, Dubai Bank PJSC,
and Jahangir Siddiqui & Company Limited (JSCL). DCD, a UK based Group
having stakes in diversified businesses, has participated in the establishment
of various Islamic Banks in different countries. During 2011, Dubai Bank PJSC
was taken over by Emirates NBD, which is majority owned by the Dubai Government
and now has merged into Emirates Islamic Bank. JSCL is the holding company of JS group and notably JS Bank. JS group also
has sizeable stakes in industrial, information, property, transport, and energy
sectors. BIPL's eight member board of directors (BoD) constitutes
representatives of sponsoring groups. The CEO, Mr. Hasan A. Bilgrami,
possessing experience with leading financial institutions, has been
instrumental in the development of the bank and stays as the key resource. He
is supported by an able team.
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