PACRA Maintains Entity Ratings of First Women Bank Limited | RW | Developing Outlook.

The ratings of First Women Bank Limited ("FWBL" or the "Bank") reflect its adequate financial position, risk profile, and strong sponsor support. Majority owned by the Ministry of Finance, the Bank operates with a mandate to serve its customers across commercial, SE & ME, consumer, and corporate sectors. The Bank has benefited from multiple capital infusions provided by the Ministry of Finance (MoF), primarily aimed at ensuring the Bank's adherence to the mandated minimum capital requirements (MCR). The current management achieved operational profitability and also helped the Bank compliant with the regulatory requirements pertaining to the publication and audit of the long pending financial statements. The incomplete audits of the previous five years have been successfully completed without qualification and published on the Bank's website with the audited reports. During CY24, the Bank has actively focused on not only business development but also employee retention by implementing a range of initiatives, including the provision of performance-based bonuses, enhanced benefits, and competitive allowances. These measures are aimed at fostering employee satisfaction, strengthening organizational loyalty, and reducing attrition, ultimately contributing to a more motivated and stable workforce for achieving better financial results.
The Bank's total equity remains largely intact at PKR 3,150mln during CY24 (CY23: PKR 3,083mln), alongside the capital adequacy ratio standing at 31.71% (CY23: 32.2%) far surpassing the minimum requirement of 18% for FWBL. It signifies the solid capacity to absorb potential losses. The minimum capital requirement (MCR) of the Bank was reported at PKR 2,166mln as of CY24 (CY23: PKR 2,145mln), non-compliant to the minimum requirement of PKR 3,000mln (net of losses). During CY24, advances decreased by 11%, amounting to PKR 7,385mln (CY23: PKR 8,222mln). Whereas, the infection ratio increased to 29% as of CY24 (CY23: 25%) due to an increase in non-performing loans (NPLs). During CY24, the Bank’s investment portfolio stood at PKR 52bln (CY23: PKR 44bln), entirely in government securities. The Bank’s prudent strategy in government securities ensures capital preservation, mitigates risk secures steady returns and provides sufficient liquidity.
During CY24, the Bank recorded a decline of 37% in the net interest income standing at PKR 1,514mln (CY23: PKR 2,074mln), primarily attributable to decline in gross markup income which stood at PKR 10,970mln (CY23: PKR 12,477mln). Whereas, the non-markup income surged by 1.1 times to stand at PKR 198mln (CY23: PKR 94mln). On the expense side, non-markup expenses registered a slight uptick to PKR 1,606mln (CY23: PKR 1,574mln), reflecting continued pressure on operational costs. As a result of a combination of rise in operating expenses, coupled with elevated taxation and declining net markup margins, the profit after tax for CY24 declined markedly to PKR 79mln (CY23: PKR 322mln). The Bank's earnings trajectory in CY24 suggests a need for strategic recalibration to improve core income generation and cost efficiency going forward.
The ratings capture the need to sustain a growth trend in profitability and deposits. Revision and successful execution of the business strategy, while improving the efficacy of the risk management framework to improve asset quality.

About the Entity
FWBL was established in 1989, focuses on catering to women at all levels of economic activity, micro, SME, and corporate. The Government of Pakistan owns a majority stake of ~82.64% in the Bank. The rest of the shareholding comprises four large banks (ABL, UBL, HBL, and MCB). Mr. Najeeb Agrawalla is the Chairperson of the Board and has 31 years of experience. Mr. Farrukh Iqbal Khan is appointed by the Ministry of Finance (MoF) on Dec 30, 2019, as President & CEO of FWBL. He is a veteran banking professional with 31 years of diversified experience.