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The Pakistan Credit Rating Agency Limited
Press Release

Date
27-Dec-18

Analyst
Sehar Fatima
sehar.fatima@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of Allied Bank Limited

Rating Type Entity
Current
(27-Dec-18 )
Previous
(06-Jul-18 )
Action Maintain Upgrade
Long Term AAA AAA
Short Term A1+ A1+
Outlook Stable Stable
Rating Watch - -

Allied Bank Limited is one of the top five banks of the country in terms of its deposit share. The bank’s franchise, spread over a network of 1,258 branches, has enabled sustainable footprints into the country’s deposit base. The bank’s risk absorption capacity, as reflected in its sound equity base, has grown more than the market average over the years. This is supplemented by a significantly higher CAR (22.4% at end-Sep18), beyond the industry average. The bank has adopted a multi-faceted approach to augment its relative standing in the market. Increased attention is being diverted towards deepening of current business relationships and an enduring emphasis has been laid on building trade business. The bank’s technology platform is a strength. This has facilitated fast and effective decision making while extending quality conventional and digital services to its customers. The related benefits would continue to unfold over the years. The bank remains focused on increasing its footprint in the market with consistent increase in number of branches / ATMs along with gradual penetration in digital banking. The ratings recognize the management's concerted efforts in sustaining the sound asset quality, while expanding its advances portfolio. The low infection ratio and high coverage ratio are considered positive. The concentration in lending portfolio is in line with bank's strategy of lending to large sized financially strong private groups and public sector entities. The continued strengthening in retail deposit market would enable further improvement in deposit granularity in terms of concentration as well as funding cost. At the same time, achieving efficiency in terms of utilization of its healthy CAR may help in further boosting ABL’s market share and profitability.

The management’s ongoing concerted efforts towards enhancing diversification in its revenue stream, achieving reduction in overall concentration, higher penetration in retail deposits and continuous improvement in cost structure remain important.

About the Entity
ABL is a large sized Bank with a system share of 6.8% as at end-Sep18 in the total deposits of the industry. Ibrahim Group (IG), through Ibrahim Holdings Pvt. Limited, owns 84% of shareholding in ABL. Apart from interest in financial sector; IG is also engaged in manufacturing of polyester and yarn. ABL has a growing subsidiary - ABL Asset Management Company (sustained 6.8% share in AUM's of industry at end-Sep18). The eight members BoD include the CEO, three sponsoring directors, three independent directors and one non-executive director. The Board now also includes one female director in compliance with regulatory requirements. Mr. Tahir Hassan Qureshi, associated with ABL from the last one decade, has been designated as the CEO since Jan-17. He has previously been serving as the Chief Operating Officer and Chief Financial Officer of the Bank. He is supported by a management team of experienced executives.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.