Analyst
Ayesha Qasim
ayesha.qasim@pacra.com
+92-42-35869504
www.pacra.com
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Related Research
PACRA Maintains Entity Ratings of The Bank of Khyber
Rating Type | Entity | |
Current (25-Jun-18 ) |
Previous (29-Dec-17 ) |
|
Action | Maintain | Maintain |
Long Term | A | A |
Short Term | A1 | A1 |
Outlook | Stable | Stable |
Rating Watch | - | - |
The ratings reflect BOK's sustained risk profile of the bank. Spreads remained low; showed a downward trend. NPLs has seen slight decreasing trend which improved asset quality. The bank has dependence on large ticket deposits from Government of Khyber Pakhtunkhwa (GoKP) and its related agencies. However, stability is observed in such deposits over time showing a 62% of the public deposits. The bank is expanding its branch network with high focus on KPK and Punjab; However, slightly establishing footprints in other cities especially Lahore and Karachi to compete with established banks. The management plans to increase advances book with higher focus preferably on infrastructure. With desired credit growth, nurturing strength of management team is essential. The ratings incorporate association of the bank with the Government of Khyber Pakhtunkhwa (GoKP). The bank raised a sizeable liquidity from repo transactions. This was deployed in lending – generating a spread. Going forward, the bank will do well to enhance the bank’s deposit base, eliminating the mismatch and creating room.
The ratings are dependent on bank's ability to hold its risk profile, while maintaining its relative market position. Improvement in the technology platform is critical to foster the control environment including reporting framework. Meanwhile, any significant infection in asset quality, thereby weakening the bank's risk absorption capacity, and/or any intervention compromising the governance standards would impact negatively.
About
the Entity
The Bank of Khyber (BoK) was established in 1991 under the BoK Act and was awarded status of a scheduled bank in September 1994. BoK was established with a vision to gradually promote Islamic banking. At present, 84 of its branches function as dedicated Islamic banking branches, whereas 82 cater conventional banking. The Government of Khyber Pakhtunkhwa (GoKP) has majority stake in BoK (70%), whereas, Ismail Industries stake is 24% in BoK.
BOK’s board comprises eight members, out of which four are GoKP nominees, including two officio members. The remaining includes one representative of Ismail Industries, while two are independent members and the Managing Director. Dr. Shahzad Khan Bangash, who worked at different departments of the Government, is the chairman of the board. Current Acting Managing Director– Mr. Muhammad Shahbaz Jameel – was appointed by the government in Oct-17. He is a seasoned banker with twenty five (25) years of diverse experience at leading multinational financial institutions.