PACRA Maintains Entity Ratings of Pakistan Kuwait Investment Company (Pvt.) Limited
Development Financial institutions (DFIs) largely operate on turf common to commercial banks. Limited depth in participation towards development of long gestation projects, low funding base and high competition become their key challenges. Joint Venture Financial Institutions are DFIs jointly conceived by the two sovereigns with primary objective of identifying and nurturing multiple development initiatives. Their ratings are mainly characterized by sovereign ownership, adequate standards of governance and relatively conservative risk appetite.
The ratings benefit from the company's strong financial profile emanating from robust risk absorption capacity and sound liquidity. PKIC’s lending book shrunk following a prudent lending and risk management approach. The management is cognizant of the opportunities and is contemplating an appropriate strategy. Nonetheless, the build-up of strategic equity investments in different companies provides a strong and stable income stream in the shape of dividends; hence, comforting the net profits. The company has focused on treasury operations where it is enhancing its participation in money market. The liquidity profile of the institution remains comfortable with access to financial institutions to support its treasury and lending operations. Strong equity base and minimal drag of NPLs on equity is a positive. Going forward, the management, while continuing to prudently increase its advances book, would focus on non-fund based revenue stream.
The ratings are dependent on the management's ability to sustain its financial profile while managing the associated risks. Management’s efforts to diversify its operations, finding a new niche for growth, while sustaining its profitability would remain critical.
Pakistan Kuwait Investment Company (Private) Limited was established in March 1979 as a joint venture between the Governments of Pakistan and Kuwait. It is equally owned by Government of Pakistan through the State Bank of Pakistan (SBP) and Government of Kuwait through Kuwait Investment Authority (KIA), representing their respective governments. The governments of Kuwait and Pakistan have been rated “Aa2 (Stable)” and “B3 (Negative)” respectively, by Moody’s in 2018. The overall control of the company vests with six-member board of directors including the CEO and five non-executive directors having equal representation from both governments. Mr. Mubashar Maqbool, Pak Kuwait’s MD, has diversified experience in Development, Commercial and Investment Banking and is associated with the company since March 2019. He has past track record in Corporate Banking, Corporate Finance, Project Financing, Commercial Banking, SME Banking as well as General Management. He is assisted by capable team.