PACRA Maintains Entity Ratings of Escorts Investment Bank Limited
The ratings reflect the financial strength of the bank. The strength was embodied hitherto in the subordinated loan given to the bank and lately of which the intended amount has been converted into equity, pursuant to the right issue exercise undertaken by the bank. As a consequence, the equity base of the bank has been augmented manifold. There is another loan available to the bank for working capital use. The financial strength is also reflected in that the bank has strong liquidity available in the form of TDR’s, deposits, debt instrument and government securities. The bank has been following a strategy of focusing on mortgage finance in which, given the market condition, asset deployment has witnessed slower rate. The bank has entered into micro lending wherein which the size is evolving though small at the moment. Going forward targets are aligned to the size of the bank. During FY19 the bank reduced its operational loss from the last year. The management has represented that the bank has already ventured into monthly cash profit. The distance to accounting loss has also been narrowed. Going forward, it is expected that the bank will be reporting profits by the end of this fiscal year. The bank is funding its needs through equity at the moment. CODs base is limited with small amounts mobilized from the corporate segment. No aggressive deposit mobilization drive is planned. Branch network for micro lending is being expanded and it is expected that with addition of 5 branches, the network will reach consolidation point for some time. This will support the revenue generation.
The ratings are dependent on the continuous financial strength and maintained liquidity position. Immaculate financial discipline and corporate governance is important. Any discrepancy in achieving its targets remains critical to the ratings.
Escorts Investment Bank Limited (EIBL), a Non-Banking Finance Company (NBFC), started its commercial operations in 1996. Major shareholding is held by Bahria Town (Pvt.) Limited and its associates (~89%) while the rest is owned by the public sector companies and general public. Bahria Town is a privately owned real-estate development company which owns, develops, and manages properties across Pakistan. It is the leading private real estate company in the country. The major ownership of BTPL is held by Chairman & CEO Mr. Malik Riaz Hussain.
EIBL’s board (BoD) comprises seven members including the CEO. The board included two independent directors. All other members are non-executive members except the CEO. Mr. Zain Malik is the Chairman of the board, the only representation of the sponsoring family. He carries rich experience of the real estate business, financial services and brokerage. The CEO, Mr. Naveed Amin, possess an experience of 28 years including financial sector work experience.