The Pakistan Credit Rating Agency Limited
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Sehar Fatima

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PACRA Maintains Entity Ratings of First Women Bank Limited

Rating Type Entity
(28-Jun-21 )
(30-Jun-20 )
Action Maintain Maintain
Long Term A- A-
Short Term A2 A2
Outlook Stable Stable
Rating Watch Yes Yes

The ratings primarily reflect strong association of FWBL with the Government of Pakistan (GoP) - the major shareholder. The Bank received various capital injections from the Ministry of Finance (MoF), latest in CY17, mainly to comply with the minimum capital requirements. The bank has not been able to publish its financial statements since Dec18. The Board of the bank remained non-functional since Jan19. Lately, The Federal Government through the MoF approved the appointment of Chairman and Board of Directors of the FWBL, enabling the management to complete the audit and finalize its financial statements. As per the unaudited financial statements, the deposit system share inched up (end-Dec20: 0.2%, end-Dec19: 0.1%) whilst CASA went down to 70.69% (end-Dec19: 77%). The growth was mainly deployed in government securities, which increased significantly. Advances witnessed a slight increase. It remains essential to hold and improve asset quality. The current management team endeavor initiatives to improve the revenue stream and managed to contain the cost. The bank's financial performance improved during the calendar year of 2020. Total income recorded uptick to PKR 1.5bln in CY20 (CY19: PKR 1.2bln); largely driven by higher policy rate and enhanced contribution from non-mark up income arising from gain on sale of government securities. Higher provisioning expense was recorded while Bank's PAT for CY20 clocked at PKR 373mln (CY19: PKR 250mln) which improved equity base. The Bank’s investment portfolio entirely comprises of government securities which augmented during the period. The bank's internal control system has depicted steady improvement and the management is also bringing efficiency which is having positive performance in the upcoming year. Going forward, the management has executed various strategic initiatives including, improvement of net spread through reducing its funding cost, expansion of retail customer base through launching of BDO model, improving lending business through onboarding investment grade rated corporate, highly performing SME business and re-branding corporate image.
COVID-19 is an ongoing challenge. The proactive measures are taken by the regulators and other concerning bodies have mitigated the potential damages much anticipated from this pandemic. As a result, the banking industry remained protected and in fact posted record profits. Vigilance is required as the loan repayment cycle remains amid variants of the pandemic continue to re-emerge.
The ratings capture the need to sustain a growth trend in profitability and deposits. Revision and successful execution of the business strategy, while improving efficacy of the risk management framework to improve asset quality.

About the Entity
First Women Bank Limited (FWBL) was established in 1989. The bank operates through a network of 42 branches spread over 24 cities nationwide as of Dec20. The bank focuses on catering to women at all levels of economic activity; SME and corporate. The Government of Pakistan owns a majority stake - ~85% (~83% through the Ministry of Finance and ~2% through NBP) in the bank and rest of the shareholding comprises of four large banks (ABL, UBL, HBL, and MCB). As of end-CY20, the overall control of the bank vested in Acting President and bank has a member Board of Director which includes Ms. Sumbul Munir, whose term has expired on May 31, 2021. After the retirement of ex-acting President Ms. Naushaba Shahzad in Sep20. MoF assigned a look-after charge for the post of acting President of FWBL to Ms. Shahida Javed. Currently, several positions are vacant after the retirement of Independent Directors in Jan19. The Acting President is directly appointed by the MoF. Ms. Shahida Javed, the Acting President since Oct20, a veteran banking professional with 30 years of diversified experience. The top management comprises of experienced banking professionals.

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.