PACRA Maintains the Entity Ratings of Samba Bank Limited

The rating of Samba Bank Limited (“Samba” or “the Bank”) is reinforced by the strong profile of the sponsoring group i.e., Saudi National Bank (SNB). The SNB is the largest commercial bank of the Kingdom of Saudi Arabia (KSA) with an equity base of SAR 183.8bln at the end of 9MCY24 (CY23: SAR 176.6bln). On 29th Mar'24, SNB received a non-binding offer from Bank Alfalah Limited (BAFL) to acquire its 84.51% stake in Samba Bank. SNB agreed to evaluate the offer, subject to regulatory approval. On 20th May'24, the State Bank of Pakistan (SBP) permitted BAFL to conduct due diligence. However, on 12th Nov'24, SNB decided to terminate the sale process of its stake in Samba Bank. Hence, the Rating Watch assigned to the Bank has now been removed. As of 9MCY24, the Capital Adequacy Ratio (CAR) of the Samba stood at 26% (Dec'23: 21.3%) well above the minimum requirement prescribed in SBP banking regulations. The consistent improvement in CAR over the years has augmented the risk absorption capacity of the SBL and provides comfort to the currently assigned rating. In 9MCY24, the Bank recorded net mark-up income at PKR 5.6bln (CY23: PKR 8.1bln) primarily directed from investments. During 9MCY24 the Bank optimized its ADR (Advances to Deposits ratio) at 58.0% (9MCY23: 58.9, CY23: 64.0%). The management has prudently recognized all infectious exposure. Consequently, there was a consistent increase in the infection ratio (9MCY24: 12.9 %; CY23: 9.1%) while the NPL Coverage Ratio has consistently remained near 100% over the years. In 9MCY24, the Bank's investments grew significantly (9MCY24: PKR 88.9 billion, CY23: PKR 70.4 billion), primarily driven by the increased investment in government securities in response to the higher policy rate. The equity of SBL stood at PKR 17.3bln as of 9MCY24.
The rating relies on the Bank’s ability to sustain its current risk profile while enhancing performance metrics. Key factors include maintaining asset quality, increasing its deposit market share, diversifying income streams, preserving a buffer in CAR, and upholding a strong governance framework.

About the Entity
Samba Bank Limited is majorly owned by Saudi National Bank (formerly Samba Financial Group) of Saudi Arabia. Saudi National Bank currently holds an 84.51% stake in Samba Bank Limited. The Bank has a network of 52 branches (CY23: 47 branches) located in 17 major cities across the country. The Board comprises nine members, including the President and CEO. The five members of the board are representatives of SNB. The Bank's President & CEO, Mr. Ahmad Tariq Azam, has broad experience in the banking and financial services sector.