AlBaraka Islamic Bank B.S.C. (E.C.) [Pakistan Branches)

The Pakistan Credit Rating Agency Limited	Press Release
a
Rating Action Lahore: (30-June-2005)

PACRA Maintains The Ratings of
AlBaraka Islamic Bank B.S.C. (E.C.) [Pakistan Branches] (ABIB)

Analyst
Sumaira Fazal
(+92-42-586 9504)
sumaira@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 both long-term and short-term ratings of AlBaraka Islamic Bank B.S.C. (E.C.) [Pakistan Branches] at “A-” (Single A minus) and “A1” (A one), respectively. The ratings have been assigned a positive outlook. The ratings denote a low expectation of credit risk and strong capacity for timely payment of financial commitments.

The ratings reflect ABIB's sustained good asset quality and strong capitalization. While the bank's performance – relative to peers – remained constrained due to its limited outreach in an increasingly competitive operating environment, the ratings factor in its improved prospects emanating from its ongoing efforts to explore new credit avenues and potential benefits in the wake of its move towards incorporation as a local Islamic bank. However, the extent of impact of these developments remains to be seen.

About the bank: AlBaraka Islamic Bank (ABIB) was incorporated in Bahrain in 1984 as an offshore bank and it is part of Dallah AlBaraka Group (DBG) – a Saudi-based corporate conglomerate. In order to consolidate the financial areas of the Group, it has been decided that a holding company with the name of AlBaraka Banking Group (ABG) will acquire all the group banks. Currently, ten banks (including ABIB) have come under the umbrella of this holding company, with a combined asset base of US $ 5.5bln and capital of US $ 550mln at end-2004. These banks have 180 branches and around 4,550 employees.

ABIB commenced commercial operations in Pakistan in 1991 and currently operates from eight branches in the country. The present country head - a professional banker with over three decades of experience - has been holding the position since the start of the bank's branch operations in Pakistan. The bank is primarily engaged in morabaha and ijarah financing. The bank has been granted Islamic banking license by the State Bank of Pakistan during 2004, and is in the process of conversion into a local Islamic bank.

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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