The Pakistan Credit Rating Agency Limited
Press Release


Sohail Ahmed Qureshi

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PACRA Maintains Entity Ratings of Habib Metropolitan Bank Limited

Rating Type Entity
(26-Jun-20 )
(27-Dec-19 )
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. To hold asset quality is crucial in the future. The Bank grew its customers deposit base by 8.3%, lower than the sector’s growth, wherein it enhanced its current deposits by ~20%, higher than sector's growth thereby increasing its CASA mix (2019: 61.6%, 2018: 57.2%). The Bank will remain focused to improve its deposit mix. As at December 31, 2019 the Bank’s CAR is 14.59%. The Tier 1 CAR increased from 12.75% in 2018 to 14.06% in 2019 while the overall CAR improved by 147 basis points. Covid-19 has posed challenges to the banking sector, as almost all segments of the economy, worldwide and domestically, are getting negatively impacted. The ramifications would continue to unfold, warranting vigilance and timely actions where needed.
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 398 branches including 31 Islamic branches, spread over 134 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-nine years 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.