PACRA Maintains Entity Ratings of Soneri Bank Limited

The ratings reflect Soneri Bank’s sustained business profile as reflected in slightly higher net interest margin. The bank’s funding base comprise of deposits and borrowings. During 9MCY18, customer deposits witnessed growth of 3% against industry growth of 6% - customer deposit system share inched down to 1.7% as at end-Sep18 (end-Dec17: 1.8%). Contribution of low costs deposits witnessed marginal decline. The lending portfolio recorded growth of ~6% (against industry growth of 14%). Non-Performing Loans witnessed a slight increase. Fee based income also witnessed some growth and needs to seek a higher stimulant. With a largely maintained cost structure, the bank’s profitability got additional support from reversal in provisioning. Hence, spread was largely maintained. Continued enhancement in non-fund based exposure and sustainable growth in fee income is important for future years. At the same time, the strategy would be to mobilize low cost deposits with an increase in branch network. The bank’s CET-I stands at 10.04% as at end-Sep18. Total CAR stands at 12.60%. The bank has issued additional Tier-1 TFC (PKR 4,000mln), which will enhance its total eligible capital further.

The rating is a function of bank's ability to maintain its market position in the banking industry while strengthening its overall risk profile. Bringing efficiency in operational structure is important for long term growth. In the comparative landscape, adding granularity to deposits and advances is critical. Meanwhile, a sustainable increase in system share and consequent profitability would be ratings positive.

About the Entity
SBL, established in 1991, operates with a network of 291 (CY17: 290) branches across the country. The Bank’s primary sponsors are the Feerasta Family who collectively own majority share in SBL. The Feerasta Family has diverse commercial interests ranging from manufacturing, exporting, banking and trade financing. The eight-member BoD, with diversified experience, comprises three nominees of Feerasta family, three independent directors, one NIT representative, and the CEO. Mr. Aftab Manzoor, CEO since 2011, is a seasoned banker. The Executive Director, Mr. Amin A Feerasta - is a member of Feerasta family and has been associated with the Bank since 2000. They are supported by an experienced management team.