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Saturday, October 20th, 2018

PACRA Maintains Entity and Sukuk Ratings of AlBaraka Bank (Pakistan) Limited

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by December 29, 2017 General

Lahore, December 29, 2017 (PPI-OT):The ratings reflect ABPL’s association with AlBaraka Banking Group – a strong Middle Eastern banking institution. Post-acquisition of Ex-Burj Bank and post-issuance of second Tier II Capital (Sukuk) both concluded favourably to bridge MCR gap and meet bank’s CAR as of Sep17. ABPL witnessed improvement in net spread on account of lower cost of deposit as ABPL shed high-cost deposits and enhanced contribution of CASA.

Post-merger increased operational cost led ABPL to report pre-provisioning losses. Non-performing portfolio inherited from Ex-Burj creates a drag on equity and profitability. A sizeable book of GoP securities in the investment portfolio helped maintaining adequate liquidity. Going forward, the management aims low cost deposit mix and cautious credit growth, in turn, better profits. Success in planned initiatives is crucial.

Effective implementation of business strategy, particularly in the back drop of challenging operating environment and competitive banking landscape, is important. The pivotal to this strategy is achieving profitability and hence generation of internal capital. Moreover, improving diversification in revenue streams, particularly from non-fund based avenues and maintaining healthy asset quality are important for bottom-line performance.

For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com

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