PACRA UPGRADES CRESBANK'S RATINGS

 

Lahore: May 16, 2003

The Pakistan Credit Rating Agency (PACRA) has upgraded both the long-term and short-term entity ratings assigned to Crescent Investment Bank Limited (CresBank) to "A-" (A minus) and "A1" (single A one), respectively. These ratings are applicable to senior unsecured creditors of the bank and indicate that there is currently a low expectation of credit risk and the capacity for honouring financial commitments is considered strong. However, this capacity might be more susceptible to changes in circumstances or in economic conditions than is the case for higher ratings.

The bank's ratings were placed on RatingWatch and downgraded subsequent to marked deterioration in the capital structure and risk profile of the bank during September 2001. Since then, the capital structure has been strengthened through considerable reduction in liabilities and the enhanced capital base. PACRA is of the opinion that the bank now has a strong capacity to meet its financial obligations in the absence of any unforeseen development. The ratings also recognize the substantial reduction in potential market risk emanating from the bank's large exposure to the equity market in the past, after considerable reduction in the size of the equity investment portfolio. Going forward, the management is considering conversion to a commercial bank through a merger. In the event of this proposal materializing, concentration of the bank's investment in the equity portfolio is expected to decline further while the bank would have alternate avenues for fund raising and revenue generation.