PACRA Maintains Rating of JS Bank Limited | TFC II
|Rating Type||Debt Instrument|
The ratings reflect improving relative position of JS Bank in the country's competitive banking landscape. This stems from enhanced system share in deposit and advances. The bank added a sizable amount of ~PKR 63bln to its customer deposit base YOY basis at Dec-17. The bank’s borrowings from financial institutions increased, alongside rise in SBP refinance. The increased liquidity has been deployed in advances (96% rise on YOY basis). The growth is substantial and needs continuous vigilance. The comforting factor is sizeable uptick in total investment book, of which government PIBs are dominant. The current NPLs absolute amount is low. The strategy of the bank is i) to foster penetration of existing network beyond 323 branches over the near-term; ii) spread advances book through different products over multiple sectors; The Bank has designed a broad spectrum of new products. iii) build non-fund based income; and iv) hold strength in treasury operations. The challenge to profitability is dried return of capital gains. The bank expects the profits to be boosted from growing direct and ancillary business. JS Bank has adequate capital level (CAR at end-Mar18: ~11.4% primarily tier I).
Ratings are dependent on JS Bank's ability to maintain its growth continuously to establish itself in the medium-sized banking space of Pakistan. Meanwhile, upholding asset quality, maintaining system share in terms of advances and deposits, adding diversity to income stream, sound CAR and strong governance framework are critical.
JS Bank Limited (JSBL), incorporated in March 2006, commenced its banking operations on December 30, 2006. JSBL is a subsidiary (~75%) of Jahangir Siddiqui & Company Limited (JSCL). Whereas the rest is widely spread. The overall control of the bank vests in the Board of Directors (BoD) including the CEO. Mr. Khalid Imran, the President/CEO of the bank, possesses substantial and well-rounded professional experience. He brings with him over 41 years of work experience in Pakistani and foreign banks. Mr. Basir Shamsie has been appointed as deputy CEO in May, 2017. He possess work experience of more than 25 years, primarily in the banking sector.
JSBL has issued unsecured, subordinated, and privately placed TFCs of PKR 3,000mln on Dec14, 2016. The issue amount support the bank to keep its Capital Adequacy Ratio (CAR) at comfortable level. The tenor of this instrument is 7 years ending in 2023. Profit is based on 6M-KIBOR Plus 140bps p.a. payable semi-annually in arrears. Major Principal Repayment (99.76%) would be in two equal semi-annual installments of (49.88%) each, in the seventh year. JSBL retains the call option on profit payment date, which may be exercised, on or after five years of issue, subject to SBP’s approval.
JSBL has issued unsecured, subordinated, and privately placed TFCs of PKR 2,000mln on December 29, 2017. The tenor of this instrument is 7 years ending in 2024. Profit is based on average 6M-KIBOR Plus 140bps p.a. payable semi-annually in arrears. Major Principal Repayment (99.76%) would be in two equal semi-annual instalments of (49.88%) each, in the seventh year. JSBL retains the call option on profit payment date, which may be exercised, on or after five years of issue, subject to SBP’s approval.