PACRA UPGRADES ENTITY RATINGS OF THE BANK OF KHYBER

PACRA UPGRADES ENTITY RATINGS OF THE BANK

OF KHYBER

 

The Pakistan Credit Rating Agency (PACRA) has upgraded the long-term and short-term entity ratings of The Bank of Khyber to"A"(Single A)[previous: A-] and "A1"(A One) [previous: A2] respectively. These ratings

denote a low expectation of credit risk emanating from strong capacity for timely payment of financial commitments.

The ratings reflect BoK's improved relative positioning amongst peers emanating from better performance, sound liquidity, and supporting capital structure. The management, while following a well conceived strategy, has gradually expanded the bank's outreach, deposits, and credit book. The ratings incorporate BoK's ability to arrest infection in its lending portfolio as reflected in its controlled asset quality. However, given tough economic fundamentals, a careful monitoring of related risks would require active attention. The bank is eyeing branch expansion with focus on low-cost deposit mobilization, while approach toward credit expansion stays cautious. The ratings continue to draw comfort from the association of the bank with Government of Khyber

Pakhtunkhwa, wherein the management plans inroads into financial services needs of the government.

The ratings are dependent on bank's ability to hold its overall risk profile,while expanding its size. Improvement in the technology platform is critical to foster the control environment including reporting framework. Meanwhile, any significant infection in asset quality, thereby weakening the bank's risk absorption capacity, and/or political intervention compromising the governance standards would impact negatively.

About the Bank

The Bank of Khyber (BoK), established in 1991 under the BoK Act, was awarded status of a scheduled bank in September 1994. The Government of Khyber Pakhtunkhwa (GoKP) has majority stake in BoK (70%), whereas, Ismail Industries with ~9% is other major shareholder. The remaining shareholding is widely dispersed. The bank is on the privatization list of the provincial government, though there has been no material progress in this regard yet.

The board presently comprises seven members, including four nominees of GoKP, including Mr. Javed Hashmat, as Executive Director, one representative of Ismail Industries, and two independent directors. After

completion of the term of previous MD in March 2013, Mr. Hashmat has assumed the role as acting MD. The bank has an able team.