Askari Bank Limited

CREDIT RATING REPORT | Jun-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
24-Jun-25 AA+ A1+ Stable Maintain -
24-Jun-24 AA+ A1+ Stable Maintain -
23-Jun-23 AA+ A1+ Stable Maintain -
25-Jun-22 AA+ A1+ Stable Maintain -
25-Jun-21 AA+ A1+ Stable Maintain -
About the Entity

Askari Bank Limited, incorporated in 1991, operates with a network of 720 branches as of Dec'24. The Fauji Consortium is the key sponsor, holding a 71.91% stake in the Bank. The remaining 28.09% shareholding is widely spread among financial institutions and the general public. Currently, overall control of the Bank vests in the eleven-member Board of Directors (BoD) including the President and CEO. Five of the board members are Fauji Foundation nominees; four are independent members, while one represents National Investment Trust Limited. Mr. Zia Ijaz has been appointed as the new President and CEO of the Bank since 17th February, 2025. He is a Fellow Chartered Accountant (FCA) and a member of ICAP Pakistan. Before joining AKBL, he worked at different leading commercial banks in Pakistan and abroad.

Rating Rationale

Askari Bank's ("AKBL" or the "Bank") assigned ratings benefit from a robust and distinguished ownership structure. The Bank’s strong brand image is further reinforced by its affiliation with the Fauji Group—one of the country’s most prominent conglomerates. This strategic association has translated into tangible advantages, including enhanced market penetration, elevated customer confidence, access to diversified and sustainable funding sources, and the development of both interest-based and non-interest-based income streams. In today’s rapidly evolving technological landscape, AKBL continued to advance its digital-first strategy through enhanced mobile application features, accelerated digital customer acquisition, and strategic initiatives such as the establishment of a dedicated innovation lab. During the year, the Bank expanded its branch network by opening 60 new branches—53 of which were Islamic—bringing the total to 720 branches, including its international presence in Bahrain and Beijing. AKBL has also made focused efforts to promote business from China, leveraging the positive spillover effects of Chinese investment in Pakistan. The management is actively pursuing initiatives to enhance business sustainability, with a strategic focus on Islamic Banking and the expansion of Shariah-compliant product offerings. Under the guidance of its Shariah Board and professional bankers, Askari Ikhlas Islamic Banking offers a diversified range of Shariah-compliant products and services to its valued customers to fulfil their banking needs. Service excellence was reinforced via process improvements, multi-skilled staff, and a 24/7 contact centre handling 85K complaints with a faster turnaround. Backed by the Fauji Group, the Bank leveraged partnerships with 670 global institutions across 88 countries to boost trade and remittances, while net markup income surged by 6.5% to PKR 63.3bln (CY23: PKR 59.4bln), driven by robust investment and markup income. The fee and commission income constitutes the largest share of non-mark-up income, followed by foreign exchange income. As of Dec'24, Askari Bank experienced a 5.5% growth in its rock-solid deposits given its exclusive franchise, reaching PKR 1,363bln, with a predominant focus on savings deposits. However, the Bank's share of customer deposits largely remained stable at 4.6% from 4.8% in CY23. The Bank's strategic use of funding sources has supported its growth initiatives. Notably, there has been a substantial expansion in the Bank's loan portfolio, at the end of Dec'24 the gross advances stood at PKR ~733bln (CY23: PKR~ 661.3bln), accompanied by a significant increase in its investment book, which stood at PKR ~1,509.7bln mainly invested in Government securities compared to CY23: PKR 1,182.5bln. The Bank's asset quality demonstrated improvement, with the infection ratio inching up to 4.7% in CY24 (CY23: 4.4%). The Bank's CAR improved to 21.4% (CY23: 18.35%).

Key Rating Drivers

The Bank is committed to maintain capital ratios well above prescribed thresholds for better risk absorption capacity. The ratings depend on the Bank's ability to maintain its competitive position. Going forward, prudent management of funding costs is crucial, and maintaining asset quality remains essential.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

Askari Bank Limited

rating analysis

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Profile
Structure

Askari Bank Limited ("AKBL" or the "Bank"), incorporated as a public limited company in 1991, is listed on the Pakistan Stock Exchange.


Background

The Bank commenced its operations as a Scheduled Commercial Bank in 1992. The registered office of the Bank is situated at AWT Plaza, the Mall, Rawalpindi, and the head office is located in Islamabad.


Operations

The Bank is principally engaged in the business of banking as defined in the Banking Companies Ordinance, 1962 and operates with 720 branches (2023: 660 branches); 719 in Pakistan and Azad Jammu and Kashmir, including 198 (2023: 137) Islamic Banking branches and 68 (2023: 63) sub–branches and a Wholesale Bank Branch (WBB) in the Kingdom of Bahrain. The Bank also has a representative office in Beijing, China. The Bank provides a diverse range of products across conventional and Islamic banking.


Ownership
Ownership Structure

The Fauji Consortium: comprising of Fauji Foundation (FF) and Fauji Fertilizer Company Limited (FFCL) collectively owns 71.91 (2023: 71.91) percent shares of the Bank. The ultimate parent of the Bank is Fauji Foundation. The remaining stake of 28.09% is widely spread among financial institutions and the general public.


Stability

Over the years, The Fauji Group, has emerged as one of the leading conglomerates of the country with established business interests in numerous sectors and industries.


Business Acumen

The Fauji Group comprises of several industrial/commercial projects in various sectors including energy, gas supply, fertilizer, cement, food, oil & gas exploration, financial services etc. includes wholly-owned as well as partly-owned ventures.


Financial Strength

The Fauji Group is one of the leading and most diversified groups in Pakistan. The group has a very strong equity and asset base. Over the years the group has stretched its business profile by entering into new industries, providing it diversity; in revenue streams, a very strong brand image, and increased hands-on knowledge of the various sectors of the economy.


Governance
Board Structure

The overall control of the Bank vests in the Eleven-member Board of Directors (BoD) including the President and CEO. Five of the Board members are Fauji Foundation nominees; four are independent members, while one represents NIT (National Investment Trust). Lt Gen Anwar Ali Hyder, HI(M) (Retd) is the Chairman of the Board.


Members’ Profile

The Board members bring diverse experience and strong academic backgrounds. Their expertise spans over financial institutions, public sector entities, oil and gas, power, fertilizers, information technology, and other sectors. The key competencies of the members are closely aligned with the Bank’s business objectives.


Board Effectiveness

The Bank has four Board Committees in place; i) Risk Management Committee, ii) Audit Committee, iii) Human Resource and Remuneration Committee, and iv) Information Technology Committee, which help the Board in the effective oversight of the Bank’s overall operations on relevant matters.


Financial Transparency

KPMG Taseer Hadi & Co., Chartered Accountants, served as the external auditors of the Bank for the year ended December 31, 2024. They expressed an unqualified opinion on the Bank’s financial statements for CY2024. For 2025 and onwards, A.F. Ferguson & Co. (a member firm of PwC) has been appointed as the external auditor of the Bank. Furthermore, Bank has independent Internal Audit Function that directly reports to the Board Audit Committee (BAC) and provides independent assurance on the quality, effectiveness and adequacy of the Bank’s governance, risk management and control environment.


Management
Organizational Structure

The Bank operates through a well-defined organizational structure headed by the President and CEO.


Management Team

Mr. Zia Ijaz has been appointed as the new President and CEO of the Bank since February 17, 2025. He is a seasoned banker with over three decades of extensive banking experience, having held senior leadership roles at leading commercial banks in Pakistan and abroad.  Mr. Zia Ijaz is a Fellow Chartered Accountant and a member of ICAP Pakistan. Mr. Saleem Anwar, a Fellow Chartered Accountant with 34 years of professional experience, is the Chief Financial Officer and Group Executive. Mr. Aslam Sadruddin having over 40 years of extensive banking experience, is the Group Executive of Operations, Transformation and IT. Mr. Sheharyar Iftikhar Khan holds an MBA, and currently serves as the Group Head of Corporate and Investment Banking, bringing 25 years of experience. Mr. Arif Raza, an M.Com, is the Global Treasurer, with 30 years of experience. Mr. Shahid Alam Siddiqui, who holds an MS and MBA, is the Group Head of Retail Banking with 36 years of experience. Mr. Khurram Sadiq, a CFA charter holder and MBA, currently serves as the Chief Risk Officer with 22 years of experience. All of them report to the President and CEO of the Bank. Going forward, the sustainability and cohesiveness of the team will remain important to continue the growth trend.


Effectiveness

The Bank's operations are currently divided into 12 functions, 11 of which report directly to the President and CEO. The Chief Internal Auditor reports to the Board Audit Committee. The Bank has seven management committees in place, chaired by the President and CEO, to oversee its day-to-day operational matters. The committees ensure, that the Bank is aligned with its current strategy.


MIS

The Bank has made a considerable investment in the IT infrastructure. The Bank’s core banking software is Flexcube developed by Oracle financial services, and has an Oracle Based Enterprise Risk Management solution and Loan Origination System. These systems not only enhance operational efficiency in the risk management processes, but also promote integrated risk assessment. Furthermore, the Bank has recorded a significant improvement in its cybersecurity posture to mitigate rising challenges and comply with best practices.


Risk Management Framework

The Bank has a robust Risk Management Framework driven by the Board Risk Management Committee and supported by multi-tier management structures, including credit risk & operational risk committees and ALCO (for interest rate and market risk) to ensure that the risk tolerance is well defined, and remains aligned with risk appetite, considering factors such as size, financials and market standing. Risk Management Group is headed by the Chief Risk Officer (CRO), who oversees the management of Credit, market/liquidity, Information Security, and Operational Risk.


Business Risk
Industry Dynamics

During CY24, Pakistan's Banking sector's total assets posted growth of ~15.8% YoY whilst investments surged by ~14.5% to PKR ~29.8trln (end-Dec23: PKR ~26.0trln). Gross Advances of the sector recorded growth of ~29.1% to stand at PKR ~16.9trln (end-Dec23: PKR ~13.1trln). Non-performing loans witnessed an increase of 7.3% YoY to PKR ~1,067.9bln (end-Dec23: ~994.8bln). The CAR averaged at 20.6% (end-Dec23: 19.7%). Looking ahead, given the expected monetary rate cut and high cost environment, Banks are likely to sustain some dilution in profitability by CY25. Source: SBP Compendium


Relative Position

AKBL, holds a customer deposit base of PKR 1,344bln other than financial institutions at end-Dec24 (end-Dec23: PKR 1,273bln). On such basis, the market share of deposits of the Bank dipped to 4.6% (end-Dec23: 4.8%).


Revenues

During CY24, AKBL’s NIM witnessed an increase of 6.5% YoY to stand at PKR 63.28bln (CY23: PKR 59.42bln), where markup income recorded an increase of 31.2% YoY to stand at PKR 401.03bln (CY23: PKR 305.64bln). The Bank’s asset yield inclined to 19.8% (CY23: 19.2%); however, the portfolio spread declined slightly to 3.7% (CY23: 4.5%) in line with market rates.


Performance

During CY24, non-mark-up income increased by 19.36% to stand at PKR 15.44bln (CY23: PKR 12.94bln). Non-markup expenses increased by 22.73% YoY to stand at PKR 36.02bln (CY23: PKR 29.35bln). The non-markup income to total income inched up to 19.6% (CY23: 17.9%). The increase in the non markup expenses is mainly driven by the high cost of technology infrastructure and branch expansion initiatives. Subsequently, the net profit stood at PKR 21.02bln (CY23: PKR 21.43bln).


Sustainability

AKBL will continue to focus on the growth of core revenues, current accounts, and return on assets by optimizing and reallocating assets and resources to their full potential and will pursue acquiring high-quality assets while enhancing relationship yields and maintaining an optimal risk profile using technology at its best. People development will be a key pillar along with technology enablement, to provide deeper insights while planned upgrades of enabling systems, payment, cash management system, and card systems are expected to create considerable enhancements to the Bank’s overall customer value proposition.


Financial Risk
Credit Risk

At end-Dec24, AKBL’s gross advances registered a growth of 10.9% YoY to stand at PKR 733.1bln (end-Dec23: PKR 661.3bln). The Bank’s gross Advances to Deposits ratio (ADR) reported at 53.75% (end-Dec23: 51.14%). While the ADR based on net advances reported at 51.02% (end-Dec23: 48.96%). The infection ratio increased to 4.7% (end-Dec23: 4.39%). The Bank has recorded PKR 34.4bln NPLs during CY24 (CY23: PKR 29.1bln). 


Market Risk

At end-Dec24, the investment portfolio reflected an expansion of 27.7% to PKR 1,509.74bln (end-Dec23: PKR 1,182.54bln). Government securities continued to dominate the overall investment portfolio, comprising 98.01% of total investments as of end-Dec24 (end-Dec23: 98.05%). The Bank’s prudent strategy in government securities ensures capital preservation, mitigates risk, secures steady returns and enhances financial stability. 


Liquidity and Funding

The Bank currently maintains a liquidity buffer that is sufficient to cater to any adverse movement in the cash flow maturity profile. 98% of AKBL's investment portfolio consists of government securities. Additionally, the overall liquidity ratio stood at 60.6% (CY23: 55.3%). The current account ratio (CA) stood at 28% (CY23: 27%), the saving account ratio (SA) stood at 61% (CY23: 57%), and the CASA ratio stood at 90% (CY23: 84%).


Capitalization

The Bank remains well-capitalized, maintaining strong buffers above regulatory requirements. As of end-Dec24, the Capital Adequacy Ratio (CAR) stood at 21.4% (CY23: 18.3%), with a Tier I CAR of 17.9% (CY23: 16.1%), in full compliance with SBP’s minimum thresholds. The Bank is committed to sustaining capital ratios significantly above the regulatory benchmarks to ensure robust risk absorption capacity. The equity base of the Bank stood at PKR 121.6bln at the end of CY24 (CY23: PKR 97.1bln).
 
 

Jun-25

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Askari Bank Limited

financial summary

(PKR mln)

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Dec-24
12M		 Dec-23
12M		 Dec-22
12M
A. BALANCE SHEET
1. Stage I | Advances - net 637,346 629,706 581,962
2. Stage II | Advances - net 56,265 0 0
3. Stage III | Non-Performing Advances 34,429 29,064 31,147
4. Stage III | Impairment Provision (32,281) (25,637) (29,298)
5. Investments in Government Securities 1,481,818 1,159,310 745,164
6. Other Investments 27,928 23,188 17,367
7. Other Earning Assets 27,008 25,102 6,668
8. Non-Earning Assets 265,863 283,273 173,124
Total Assets 2,498,374 2,124,006 1,526,134
6. Deposits 1,363,735 1,293,146 1,142,575
7. Borrowings 881,212 655,363 245,432
8. Other Liabilities (Non-Interest Bearing) 131,798 78,375 64,805
Total Liabilities 2,376,746 2,026,883 1,452,811
Equity 121,629 97,123 73,322
B. INCOME STATEMENT
1. Mark Up Earned 401,028 305,636 165,796
2. Mark Up Expensed (337,749) (246,214) (125,834)
3. Non Mark Up Income 15,441 12,936 11,620
Total Income 78,721 72,359 51,582
4. Non-Mark Up Expenses (36,021) (29,348) (23,080)
5. Provisions/Write offs/Reversals 1,807 (966) (1,042)
Pre-Tax Profit 44,507 42,044 27,459
6. Taxes (23,485) (20,610) (13,398)
Profit After Tax 21,023 21,435 14,062
C. RATIO ANALYSIS
1. Performance
Net Mark Up Income / Avg. Assets 2.7% 3.3% 2.9%
Non-Mark Up Expenses / Total Income 45.8% 40.6% 44.7%
ROE 19.2% 25.2% 21.8%
2. Capital Adequacy
Equity / Total Assets (D+E+F) 4.9% 4.6% 4.8%
Capital Adequacy Ratio 21.4% 18.3% 15.9%
3. Funding & Liquidity
Liquid Assets / (Deposits + Borrowings Net of Repo) 60.6% 55.3% 53.8%
Net Financial Assets to Deposits Ratio [(Total Finances - net + Non-Performing Finances - net) / Deposits] 51.02% 48.96% 51.10%
Current Deposits / Deposits 28.4% 27.3% 30.6%
Saving Deposits / Deposits 61.3% 56.6% 49.5%
4. Credit Risk
Impaired Loan Ratio | [Stage III | Non-Performing Advances / Gross Advances] 4.7% 4.4% 5.1%

Jun-25

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Askari Bank Limited

rating scale

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Jun-25

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Askari Bank Limited

regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
  2. Restrictions
    1. No director, officer, or employee of PACRA communicates the information acquired by him for use for rating purposes to any other person, except where required under law to do so. (Chapter III; 10-(5))
    2. PACRA does not disclose or discuss with outside parties or make improper use of the non-public information which has come to its knowledge during a business relationship with the customer. (Chapter III; 10-7-(d))
    3. PACRA does not make proposals or recommendations regarding the activities of rated entities that could impact a credit rating of the entity subject to rating. (Chapter III; 10-7-(k))
  3. Conduct of Business
    1. PACRA fulfills its obligations in a fair, efficient, transparent, and ethical manner and renders high standards of services in performing its functions and obligations. (Chapter III; 11-A-(a))
    2. PACRA uses due care in the preparation of this Rating Report. Our information has been obtained from sources we consider to be reliable, but its accuracy or completeness is not guaranteed. PACRA does not, in every instance, independently verify or validate information received in the rating process or in preparing this Rating Report. (Clause 11-(A)(p))
    3. PACRA prohibits its employees and analysts from soliciting money, gifts, or favors from anyone with whom PACRA conducts business. (Chapter III; 11-A-(q))
    4. PACRA ensures before the commencement of the rating process that an analyst or employee has not had a recent employment or other significant business or personal relationship with the rated entity that may cause or may be perceived as causing a conflict of interest. (Chapter III; 11-A-(r))
    5. PACRA maintains the principle of integrity in seeking rating business. (Chapter III; 11-A-(u))
    6. PACRA promptly investigates in the event of misconduct or a breach of the policies, procedures, and controls, and takes appropriate steps to rectify any weaknesses to prevent any recurrence, along with suitable punitive action against the responsible employee(s). (Chapter III; 11-B-(m))
  4. Independence & Conflict of Interest
    1. PACRA receives compensation from the entity being rated or any third party for the rating services it offers. The receipt of this compensation has no influence on PACRA’s opinions or other analytical processes. In all instances, PACRA is committed to preserving the objectivity, integrity, and independence of its ratings. Our relationship is governed by two distinct mandates: i) rating mandate - signed with the entity being rated or issuer of the debt instrument, and ii) fee mandate - signed with the payer, which can be different from the entity.
    2. PACRA does not provide consultancy/advisory services or other services to any of its customers or their associated companies and associated undertakings that are being rated or have been rated by it during the preceding three years, unless it has an adequate mechanism in place ensuring that the provision of such services does not lead to a conflict of interest situation with its rating activities. (Chapter III; 12-2-(d))
    3. PACRA discloses that no shareholder directly or indirectly holding 10% or more of the share capital of PACRA also holds directly or indirectly 10% or more of the share capital of the entity which is subject to rating or the entity which issued the instrument subject to rating by PACRA. (Chapter III; 12-2-(f))
    4. PACRA ensures that the rating assigned to an entity or instrument is not affected by the existence of a business relationship between PACRA and the entity or any other party, or the non-existence of such a relationship. (Chapter III; 12-2-(i))
    5. PACRA ensures that the analysts or any of their family members shall not buy, sell, or engage in any transaction in any security which falls in the analyst’s area of primary analytical responsibility. This clause, however, does not apply to investments in securities through collective investment schemes. (Chapter III; 12-2-(l))
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  5. Monitoring and Review
    1. PACRA monitors all the outstanding ratings continuously, and any potential change therein due to any event associated with the issuer, the security arrangement, the industry, etc., is disseminated to the market immediately and in an effective manner after appropriate consultation with the entity/issuer. (Chapter III; 17-(a))
    2. PACRA reviews all the outstanding ratings periodically on an annual basis. Provided that public dissemination of annual review and in an instance of change in rating will be made. (Chapter III; 17-(b))
    3. PACRA initiates an immediate review of the outstanding rating upon becoming aware of any information that may reasonably be expected to result in downgrading of the rating. (Chapter III; 17-(c))
    4. PACRA engages with the issuer and the debt securities trustee to remain updated on all information pertaining to the rating of the entity/instrument. (Chapter III; 17-(d))
  6. Probability of Default
    1. PACRA’s Rating Scale reflects the expectation of credit risk. The highest rating has the lowest relative likelihood of default (i.e., probability). PACRA’s transition studies capture the historical performance behavior of a specific rating notch. Transition behavior of the assigned rating can be obtained from PACRA’s Transition Study available at our website. (www.pacra.com) However, the actual transition of rating may not follow the pattern observed in the past. (Chapter III; 14-3(f)(vii))
  7. Proprietary Information
    1. All information contained herein is considered proprietary by PACRA. Hence, none of the information in this document can be copied or otherwise reproduced, stored, or disseminated in whole or in part in any form or by any means whatsoever by any person without PACRA’s prior written consent.

Jun-25

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