The Pakistan Credit Rating Agency Limited
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Faraan Taimoor

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PACRA maintains Entity & Debt Instruments Ratings of Bank Al Habib Limited

Rating Type Debt Instrument
Action Initial Preliminary
Long Term AA AA
Short Term - -
Outlook Stable -
Rating Watch - -

The rating reflects the bank's sustained performance, exceptional asset quality, satisfactory financial profile and strong liquidity. The bank has solidified its relative positioning in the universe of large sized banks with maintained share in the country's customer deposits. The bank continued with its strategy for outreach expansion - adding significant branches every year. The strength of the bank is reflected in the high proportion of retail deposits in the total, concentration is low and hence risk is reduced. Trade finance is the bank's hallmark, yet the bank is building alternative revenue streams, while exploring opportunities in CPEC related projects. The rating draws comfort from bank's experienced management team, prudent risk management policies and deep rooted relationship with clients - borrowers as well as depositors.

The ratings are dependent on the bank's sustained risk profile. In the wake of heightened competition, profitable growth is a challenge while retaining the relative positioning in the industry. The equity base of the bank and CAR are satisfactory and may need to be enhanced in view of the expected growth in loans and advances.

About the Entity
BAHL, incorporated in Oct 1991, operates with a network of 637 branches /sub-branches, including 49 Islamic banking branches at end-Sep17. The sponsors of BAHL are members of the Habib family - one of the oldest and most distinguished names in Pakistan's banking sector.

BAHL's ten-member BoD includes four representatives of Habib family and three independent members. Mr Mansoor Ali Khan, the bank's CEO, has been associated with the bank for over twenty years. He is backed by a team of experienced professionals, most of whom have long association with the bank

About the Instrument
TFC V was issued in Mar-16 at 6M-KIBOR Plus 75bps p.a. payable semi-annually in arrears. The tenor of this instrument is 10 years, callable in Mar-21 or thereafter with prior approval of SBP.

The TFC-VI is an unlisted, unsecured, subordinated, perpetual and non-cumulative instrument. The instrument will be up to PKR 7,000 mln inclusive of a Green Shoe option of PKR 2,000 mln, whereas the profit rate would be 6M KIBOR plus 150 bps p.a.

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.