PACRA ASSIGNS RATINGS TO

TRUST INVESTMENT BANK LIMITED

 

Lahore: June 27, 2003

The Pakistan Credit Rating Agency (PACRA) has assigned Trust Investment Bank Limited (TIBL) long-term and short-term ratings of "BBB-" (Triple B minus) and "A3" (Single A three), respectively. The entity ratings are applicable to the senior unsecured creditors of the company. The secured TFCs (TFC I: PKR 287 mln, TFC II First Tranche: PKR 334 mln) have been assigned a rating of "BBB" (Triple B). These ratings have also been placed on RatingWatch pending the completion of the proposed merger/amalgamation process. The ratings indicate that there is currently a low expectation of credit risk and an adequate capacity for timely payment of financial commitments.

TIBL's ratings reflect the constrained business growth and asset quality with increasing proportion of non-earning assets. The management is hopeful of a quick turnaround in terms of improved prospects following the expected change of status to a commercial bank. However, given the increasingly competitive environment in the banking sector, it remains to be seen when and to what extent the expectation is realized. While immediate benefits could accrue in terms of reduction in the cost of funds, this could be offset by a higher cost structure in the short run.

TIBL is currently in the process of merging/amalgamating with Fidelity Investment Bank Limited and local operations of Doha Bank, Qatar, to form Trust Commercial Bank Limited, subject to statutory approvals.