The Pakistan Credit Rating Agency Limited P R RESS ELEASE PACRA MAINTAINS ENTITY AND INSTRUMENT RATINGS OF BANK ALFALAH LIMITED

PACRA MAINTAINS ENTITY AND INSTRUMENT RATINGS OF BANK ALFALAH LIMITED

The Pakistan Credit Rating Agency (PACRA) has maintained the long-term and short-term entity ratings of Bank Alfalah Limited (BAFL) at "AA" (Double A) and "A1+" (A one plus) respectively. The ratings of three unsecured subordinated TFCs issues of 1) PKR 1,325mln, 2)PKR 5,000mln, and 3) PKR 5,000mln have been maintained at "AA-" (Double A minus). These ratings denote a very low expectation of credit risk emanating from a very strong capacity for timely payment of financial commitments.

The ratings reflect BAFL's sustained market position along with improving profitability, strong liquidity, and strengthening equity base. The infection ratio of the bank, though less than peers, has experienced accretion and is concentrated in few accounts. The management, while maintaining cautious lending approach, is making significant recovery efforts to harness its asset quality. The bank's performance is expected to benefit from its expanding franchise enabling effective advances deployment and deposit mobilization. Bank Alfalah's Islamic operations have leading position amongst conventional banks; this, while supporting performance, has critical role in the bank's growth strategy. The ratings recognize demonstrated support of Abu Dhabi group as a key factor.

About the Company

Bank Alfalah Limited (BAFL), listed on all the bourses of the country, has a network of 471 branches, at end-Mar13, including 110 Islamic banking branches - the biggest network by any conventional bank. Abu Dhabi Group (ADG), comprising some of the prominent members of UAE's ruling family, leading businessmen of UAE and their associates, owns the majority shareholding in the bank. The bank has strategic investments in communication sector and other dimensions of financial sector - asset management, brokerage, and insurance. However, the non-financial investments are still far from reaching sustainable strength.

The seven-member BoD comprises four members from ADG, two independent directors and the CEO. The chairman of the board, H.H. Sheikh Hamdan Bin Mubarak Al Nahayan, is Federal Minister of Higher Education and Scientific Research, United Arab Emirates. Mr. Atif Bajwa, the CEO, has over thirty years of banking experience. He is supported by a seasoned management team, though a number of them are new to the bank.

About the TFCs

BAFL has three unsecured and subordinated TFCs in issue. TFC-III of PKR 1,325mln, issued in Nov-05 is for a tenor of 8 years. Principal repayment would be in three semi-annual installments commencing from 84th month of the issue. TFC-IV of PKR 5,000mln issued in Dec-09 and TFC-V of PKR 5,000mln issued in Feb-13, are also for a tenor of 8 years each. The principal repayment of TFC-IV would be in three equual installments commencing from 84th month of the date of issue while principal repayment of TFC-V would be in bullet form at the time of maturity.