JCR-VIS Reaffirms Rating of TFC-1 issue of Allied Bank Limited at AA
Karachi, November 24, 2014 (PPI-OT): JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the rating assigned to TFC-1 issue of Allied Bank Limited (ABL) at ‘AA’ (Double A). Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on October, 02, 2013.
ABL is one of the largest banks in the country having widespread outreach and a sizable market share in terms of deposits. The assigned rating incorporates the bank’s risk adjusted capitalization that has remained its key strength over the years. Given the capitalization level, the bank has ample room to take advantage of growth opportunities in the market.
The pace of lending activities remained moderate in 2013 with loan book largely comprising corporate lending; however, the bank has posted some growth in advances lately. ABL’s asset quality indicators compare favorably to peers in the industry.
The liquidity profile of the bank is also considered robust. ABL outpaced the industry growth in deposit mobilization, thereby achieving a higher market share in 2013 as compared to the preceding year. The deposit mix also depicted improvement in concentration level. Liquidity profile also draws strength from a sizable investment portfolio that largely includes government securities. Accordingly, credit risk emanating from the portfolio is minimal. ABL plans to reduce its equity exposure to align it with the revised regulation within the regulatory stipulated timeframe.
The bank’s profitability continues to be strong, despite compression in spreads. While balance sheet growth in the future is likely to mitigate pressure on spreads, the bank may also focus on broadening its lending base and increase fee based income to further augment its earnings. The bank has also launched its Islamic Banking Operations with four branches in 2014. This is likely to allow the bank to achieve more depth in banking products while tapping into a market niche that is fast growing in Pakistan.
For more information, contact:
Ms. Sobia Maqbool
JCR-VIS Credit Rating Company Limited
VIS House, 128/C,
25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi
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