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Credit Rating Company reaffirms ratings of United Bank

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by June 11, 2012 General

Karachi, June 11, 2012 (PPI-OT): JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of United Bank Limited (UBL) at ‘AA+/A-1+’ (Double A Plus/A-One Plus). Ratings of the four outstanding subordinated debt instruments, TFC-1, TFC-2, TFC-3 and TFC-4, issued by UBL have also been reaffirmed at ‘AA’ (Double A). Outlook on the assigned ratings is ‘Stable’.

Having a share of 8.4% in the banking sector’s total domestic deposits at end-Dec’11, UBL is the third largest commercial bank in Pakistan. To further growth in deposits, UBL has pursued aggressive growth in its branch network since 2011. Large proportion of current and savings deposits has allowed the bank to keep cost of deposits low and spreads on the higher side.

Spreads may come under pressure in the on-going year with full-year impact of discount rate cut in the last quarter of the out-going year to be reflected in 2012, coupled with increase in minimum profit rate on saving products to 6%.

Core lending activities have picked up pace since the last quarter of the out-going financial year. In the private sector loan book, fresh accretion of NPLs has witnessed a declining trend; moreover, going forward, lending to blue chip companies is expected to increase.

Public sector loan book has witnessed fresh classifications in the on-going year. While these advances represent exposure against the sovereign, there is a delay in settlement of these loans.

To achieve geographic diversification, proportion of assets employed in overseas operations is projected to increase primarily through further deepening in markets where the bank already has presence. This is expected to provide increasing risk diversification, over time, if cyclical downturns are uncorrelated in the markets in which the bank operates.

Liquidity profile of the bank derives strength from availability of sizeable liquidity cushion against deposits and borrowings and its broad-based depositor profile. Capitalization of the institution is also considered sound.

For more information, contact:
Mr. Javed Callea
JCR-VIS Credit Rating Company Limited
Tel: +9221 35311861 (10 lines) (Ext: 501)
Fax: +9221 35311872-3
E mail:


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