The Pakistan Credit Rating Agency Limited
Press Release


Muhammad Obaid

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PACRA Maintains Entity Ratings of Habib Metropolitan Bank Limited

Rating Type Entity
(27-Jun-19 )
(27-Dec-18 )
Action Maintain Maintain
Long Term AA+ AA+
Short Term A1+ A1+
Outlook Stable Stable
Rating Watch - -

The ratings of Habib Metropolitan Bank (HabibMetro) is vested in the brand strength of the Bank, flanked by a family of astute bankers. The Bank is also associated 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 Bank has a strong forte in the business hub of Pakistan in terms of its presence and contribution of deposits and advances. The Bank had infection ratio as an issue, the net accretion of which has halted. To hold asset quality is crucial in the future. Deposit growth, indeed CA and SA, is a challenge. The Bank grew its deposit base, wherein it enhanced its Saving and Time deposit. The CAR of the Bank has taken a hit due to mark-to-market of its investment book. The Bank has a sizable revaluation gain available on account of properties, which may be recognized to boost the Capital base. Issuance of Tier I/ Tier II bond is another option, should the management decide to avail it. The profitability in the recent period is higher, providing internal generation of Capital.
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.

About the Entity
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 352 branches including 31 Islamic branches, spread over 112 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.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.