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PACRA Maintains Entity Ratings of BankIslami Pakistan Limited | Rating Watch

Rating Type Entity
Action Maintain Maintain
Long Term A+ A+
Short Term A1 A1
Outlook Stable Stable
Rating Watch Yes -

The ratings reflect Bank Islami's sustained risk profile. During 9MCY18, the bank’s lending portfolio has slimmed down while NPLs has witnessed an upward trend. The NPLs are a concern, especially the borderline cases. Investment book has increased; mix remained tilted towards government securities. Asset yield inched up driven by increase in policy rate. The funding base comprise of deposits and borrowings. The bank also restrained the quantum of high cost of deposits, rationalizing its cost of funds. Consequently, the bank’s spread inched up. The significant milestone achieved by the bank is pre-provisioning operational break-even. It is a good omen and will reflect positively on its future profitability. Going forward, some structural changes are expected as key positions are filled with the experience individuals. The bank management is positive about achieving cost efficiency and has started pursuing new business plan under leadership of new CEO. The focus would be on the risk management side which will help bank to smooth line its business.
The rating watch captures the bank's resolve to deal with the aftermath of the recent cyber attack including its financial ramifications. Also the need to be a sustainable profitable institution. At the same time maintaining a strong capital adequacy while pursuing growth is important. Any downward spiral in profits, or incidence of non-performing assets with consequent impact on equity may negatively impact the ratings.

About the Entity
BIPL, a scheduled Islamic bank, commenced operations in Apr-06 and is listed on the Pakistan Stock Exchange. BankIslami Pakistan Limited acquired defunct KASB Bank Limited, which stands merged with and into BankIslami effective May 07, 2015. Post-acquisition, BIPL has a branch network of 322 branches. The four business groups hold a cumulative ~76% stake namely Jahangir Siddiqui & Company Limited (JSCL) (21%), Mr. Ali Hussain along with SAJ Capital Management Limited (21%), Randeree Family (~20%), and Dubai Bank PJSC (14%).

BIPL's board of directors (BoD) comprises eight members including CEO and two independent directors. Mr. Syed Amir Ali has joined the bank as Deputy CEO in Apr-18. He has taken up the position of 'President & CEO' in Oct-18. He is a Chartered Accountant and CFA Chartered holder by qualification, carrying with himself more than one decade experience mainly of Meezan Bank. His strategy of work has yet to be seen in next years.

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