Muhammad Jhangeer Hanif
PACRA Maintains Entity Ratings of Habib Metropolitan Bank Limited
The ratings incorporate HabibMetro's association with a diversified and financially strong international bank - Habib Bank AG Zurich (HBZ). This association helps in assimilating the parent's best practices into HabibMetro, while fostering control environment with enhanced level of oversight. The ratings recognize the bank's healthy financial profile reflected in its strong CAR, which is higher than the industry average CAR, primarily constituting Tier I. The bank has experienced downtrend in profitability which will remain a challenge in days to come. With dynamic competition in the market, holding onto a sustained market share (deposits and advances) with profitable growth has become increasingly difficult. Competition has intensified in the forte of the bank: trade business. The bank’s strategy envisages re-orientation of the bank towards supply chain. The bank experienced relatively high infection compared to most peers, though these are considerably covered. NPL's are high; management's efforts must translate in sustained asset quality - indeed improvement. The bank needs to diversify its deposit base.
The ratings are dependent on the management's ability to augment its position generally in the banking industry and particularly in its market niche - trade finance in the wake of rising competition. Any weakening in asset quality will in turn put pressure on the bank's profitability and risk absorption capacity.
HabibMetro, commencing operations in 1992, is listed on Pakistan Stock Exchange. The bank is a 51% owned subsidiary of HBZ. HBZ, incorporated in Switzerland in 1967, is owned and managed by the Habib family. HabibMetro makes substantial contribution towards consolidated assets of Habib Bank AG Zurich. HabibMetro has a nationwide network of 320 branches including 29 Islamic branches, spread over 94 cities.
The nine member board comprises CEO along with two representatives of HBZ, three independent directors and three non-executive directors. The CEO, Mr. Mohsin Nathani, carries experience of over twenty-five in domestic and international banking industry. A professional team of senior executives assists the Chief Executive.