The Pakistan Credit Rating Agency Limited
Press Release
a

Rating Action
Lahore: (20-June-2005)
   

PACRA Maintains Ratings of Bank Alfalah Limited (BAL)

 

 
Analyst
Shahzad Saleem
(+92-42-586 9504)
shahzad@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 Bank Alfalah Limited at “AA” (Double A) and “A1+” (A one plus), respectively. These ratings are applicable to senior unsecured creditors (depositors) of the bank. The ratings of unsecured subordinated TFC issues of PKR 650mln and PKR 1,250mln are maintained at “AA-” (Double A Minus). These ratings denote a very low expectation of credit risk emanating from a very strong capacity for timely payment of financial commitments.

BAL's ratings reflect the bank's well-conceived business strategy supported by an effective risk management system, helping the bank to maintain good asset quality despite its high growth mode in recent years. Bank Alfalah's business is governed by a low-margin high-volume philosophy. In recent years, the bank has shown aggressive growth in all areas of business including deposit mobilization, credit expansion and geographical outreach. BAL is the fifth largest bank in the country in terms of total assets with a network of 90 branches, including 11 Islamic branches at end-04. BAL plans to continue network expansion (around 60 more branches in the near-term). BAL's strategy encompasses continuing growth in business volumes through providing a wider spectrum of innovative financial products and solutions to an expanding client base. However, this growth is without compromising on the quality of the credit portfolio for which a well-designed, transparent risk management system is in place.

About the bank: Bank Alfalah Limited (BAL), since its privatization in 1997, is majority owned by the Abu Dhabi Group. Pursuant to successful offer for sale of 20% shares by some of shareholders, the bank was listed on the Karachi Stock Exchange during 2004. BAL is providing a full range of banking facilities. The future strategy of the management envisages continuation of high growth through expansion of branch network and introduction of new products.

About the TFC issues: BAL issued its first unsecured subordinated TFC during December 2002 for a tenor of 6 years at a floating rate of latest cut-off yield on 5 year PIB plus 1.35% with a floor of 10.00% and a cap of 15.00%. Principal redemption will be in two equal semi-annual installments commencing from the 66 th month of the issue. The bank issued second unsecured subordinate TFC for a tenor of 8 years carrying mark-up at a floating rate of latest 6-month KIBOR plus 1.5% during December 2004. Major principal redemption will be in three equal semi-annual installments commencing from the 84 th month of the issue.
 
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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