The Pakistan Credit Rating Agency Limited
Press Release
a

Rating Action
Lahore: (17-January-2007)
    PACRA Maintains The Ratings of IGI Investment Bank Limited While Assigning a Negative Outlook
 

 
Analyst
Talal Naeem
(+92-42-586 9504)
talal@pacra.com

 

 

 










 

 




 

 

 

 

 

 

 

Disclaimer
This press release is transmitted to you for this sole purpose of dissemination through your newspaper/magazine/agency. The press release may be used by you in full or in part without changing the meaning or context thereof but with due credit to PACRA. However, PACRA has the sole right of distribution of its press releases for consideration or otherwise through any media.

  

The Pakistan Credit Rating Agency (PACRA) has maintained the long-term and short-term entity ratings of IGI Investment Bank Limited (IGI IBL) (formerly First International Investment Bank- Interbank) at “A” and “A1” respectively. The ratings of the secured, listed TFCs issue of PKR 500mln is maintained at “A+”. These ratings indicate a low expectation of credit risk and a strong capacity for timely payment of financial commitments.

The ratings reflect the bank’s conservative risk appetite, which, supported by an adequately leveraged capital structure, has ensured a strong risk absorption capacity. However, the bank’s profitability remains low, mainly an outcome of a) intense competition in the bank’s core financing operations resulting in continuing squeeze in spreads, and b) limited inroads into stable – indeed growing – fee-based businesses. Although the management is striving hard to develop non-fund based revenue streams, building the requisite human and infrastructure resources has proven to be an uphill task. While adequate progress has been made in this regard since the appointment of the current Chief Executive, given the increasingly competitive peer setting and the bank’s relatively recent efforts to diversify and expand revenue streams, the impact on the bottom line is limited. In PACRA’s opinion, therefore, IGI IBL’s performance – both in absolute terms and relative to peers – is likely to remain subdued. The negative rating outlook is a reflection of this opinion.

About the bank: IGI IBL, initially incorporated in 1990 as Interbank, is majority owned by Packages group (55%), directly by individuals and through different group companies mainly International General Insurance Company of Pakistan Limited (IGI). Recently there is an increasing realization by the group to strengthen its profile within the financial sector, as group companies now offer the full range of non-banking financial services. As a result, all group companies in the financial segment are being branded together as “IGI Financial Services”.

The bank, listed on Karachi and Lahore Stock Exchanges, provides services in five cities with the head office at Karachi. The current CEO, who joined the bank in June 2004, has over 20 years of banking and capital markets experience in various senior management positions both locally and abroad and is spearheading the bank’s progress towards developing non-fund based revenues.

 
 
The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity.

PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings.

PACRA's opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.

 

    
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