PACRA Maintains the Rating of BankIslami Pakistan Limited | ADT-1 Modaraba Sukuk I | PKR 2 Bln| Apr-20

BankIslami Pakistan Limited ("BIPL" or the "Bank") is the first Islamic commercial Bank to receive an Islamic banking license in Pakistan. The Bank has demonstrated remarkable growth over the last couple of years in areas crucial to the risk profiling of any commercial bank. During CY23, the Bank underwent a significant change in ownership, JS Bank Limited, one of the sponsor shareholders of the Bank, elevated its shareholding to 75.12% and became the Parent Company of the Bank, making BankIslami an integral part of the JS Group. As of Sep'24, the deposit base of the Bank grew by 6% to stand at PKR 551.9bln (end-CY23: PKR 522.5bln) with a large contribution from current and term deposits. The deposit growth is in line with the Bank's strategy to bring the sticky deposits and firm up the balance sheet. As of Sep'24, BIPL's net advances declined by 33% to PKR 172.9bln (Dec'23: PKR 230bln), alongside an increase in the infection ratio. During 9MCY24, the profit after taxation strengthened by 20% to stand at PKR 10.2bln on YoY basis (9MCY23: PKR 8.4bln) attributable to enhanced net markup income witnessing an increase of 19% on YoY basis to stand at PKR 33.8bln (9MCY23: PKR 28.3bln). As of Sep'24, the equity of the Bank surged by 26% to stand at PKR 46.08bln (CY23: PKR 36.5bln), while its CAR strengthened to 29.16% (end-CY'23: 23.79%) indicating sufficient growth cushion for the Bank.
The rating incorporates the Bank's ability to strengthen its market position in its peers with improved risk management. The transformation in the ownership structure adds value to the ratings. However, the improvement in the asset quality will remain significant.

About the Entity
BankIslami Pakistan Limited, commenced operations in Apr-06 and is listed on Pakistan Stock Exchange (PSX). The Bank has 513 branches as of end-Sep'24 (CY23: 440 branches). BIPL is a subsidiary (75.12%) of JS Bank Limited. Mr. Ali Hussain, holds 12.53% of the stake including 1.95% shares held through SAJ Capital Management Ltd; while the remaining stake is widely spread. BIPL’s eight-member Board of Directors including the CEO constitutes representatives of sponsoring groups and independent directors. Mr. Suleman Lalani, Group President of Jahangir Siddiqui & Co. Limited, served as the Chairperson of the Board. Mr. Rizwan Ata served as the President & CEO of the Bank. While, Mr. Imran Haleem Shaikh has been appointed as the Deputy CEO of BIPL.

About the Instrument
BankIslami Pakistan Limited issued fully paid up, rated, listed, perpetual, unsecured, subordinated, non-cumulative and contingent convertible listed modaraba Sukuk certificates (“Sukuk”). The issue amount of the Sukuk is PKR 2bln. The tenor of the Sukuk is perpetual and carries a profit rate of 3MK + 2.75%. The profit is being paid monthly in arrears on the outstanding principal amount on a non-cumulative basis. The amount raised is part of BIPL's Additional Tier 1 Capital for capital adequacy ratio as per guidelines set by SBP. Neither profit nor principal will be payable in respect of Sukuk, if such payment will result in a shortfall in the Bank’s MCR or CAR. The Bank may call the Sukuks, with prior approval of SBP, after five years from the date of issue.