The Pakistan Credit Rating Agency (PACRA) has maintained the long-term and short-term entity ratings of Trust Leasing & Investment Bank at AA- (Double A Minus) and A1+ (A One Plus) respectively. The rating of each of the three issued secured Term Finance Certificates has been maintained at AA (Double A). The proposed TFC issue of PKR 500mln has also been assigned a rating of AA (Double A). 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 the bank’s strong capital structure supported by an adequate level of profitability. At the same time, the ratings recognize the strategy of the new management to diversify the scope of bank’s operations with emphasis on developing fee based revenue streams. The management is working in a structured manner to build the requisite human and infrastructure base. Although these initiatives, having cost implications, would dampen the bank’s profitability in the initial phase, these are expected to help the bank sustain the intensifying competitive pressures. Meanwhile, though the bank has experienced higher incidence of impairment in its loan book, the prudent collateralization policy is likely to provide cushion against any material loss.

About the TFC Issues: TLIBL issued its first secured TFC in Dec-03 for a tenor of 5 years. The instrument carries a profit rate of 2% above the State Bank discount rate with a floor of 9% and a ceiling of 14%. The bank issued the first tranche of its second secured TFC with shelf registration of PKR 1,000mln in Jan-05. The issue has a tenor of 5 years and a profit rate of 6 months KIBOR+3% with a floor of 6% and a cap of 10%. The second tranche of PKR 375mln of TFC-II was issued in May-06 for a tenor of 5 years at a rate of KIBOR+2% without any floor and cap. All these instruments, with principal repayable in 10 semi-annual installments, are secured by way of first charge on specific leased assets and related receivables with 25% margin. The bank is in the process of issuing its fourth TFCs of PKR 500mln. The instrument would have a tenor of 4 years and a profit rate of 6 months KIBOR plus 2% without any floor and cap, but a call option exercisable after 2 years. Principal would be repaid in 6 equal semi-annual installments commencing from the 18^th month after issuance. The security structure would be similar to existing instruments.

About the company:  TLIBL, incorporated in July 1992, is listed on all the three stock exchanges. Subsequent to recent change in ownership structure, the majority shareholding (around 80%) in the bank is owned by a syndicate of diversified groups – Newage (industrial corporates), FNE (financial services) and Habib Rafique (construction). The seven-member board comprises distinguished entrepreneurs belonging to these groups and professionals with extensive exposure to financial sector. The Chief Executive Officer, Mr. Javaid B. Sheikh, has over 30 years experience of commercial and investment banking