PACRA Maintains the Entity Ratings of JS Bank Limited.

The assigned ratings of JS Bank Limited's (“JSBL” or the “Bank”) reflect its consolidated position following the majority stake of the BankIslami Pakistan Limited. The strengthened position marked the Bank as one of the Country’s fastest-growing financial institutions. The positive fundamentals of the Islamic banking industry in general also lend support to the ratings. On a consolidated basis, JSBL has retained its market share of 4% (CY23: 4%) on the basis of customer deposits. JSBL, a tech-driven mid-sized Bank, is stabilizing its market position by leveraging its regional presence and diverse product offerings. Backed by a solid structural foundation and a skilled, resilient team, the Bank operates with well-defined systems to ensure efficient execution of its strategic goals and support sustainable growth. The Bank has increasingly gained a tech-savvy image, while continuously augmenting its futuristic layout. It has heavily invested in its digital services; "Zindigi," has become a hallmark of the Bank’s digital presence. In CY24, the Zindigi app has shown strong growth, with throughput rising 42% to PKR 206bln, deposits through the app reaching PKR 6.7bln, and downloads increasing 31% to 12.3mln. During CY24, the Bank’s gross performing advances book increased to PKR 226.4bln (CY23: PKR 197.6bln) primarily attributable to individuals, financial and textile sectors. However, asset quality pressures were evident, as gross non-performing advances (NPLs) increased to PKR 21.3bln (CY23: PKR 16.2bln), leading to a rise in the infection ratio to 8.6% from 7.6% YoY basis. The investment portfolio is predominantly composed of government securities, with a tilt towards floating-rate instruments. JSBL demonstrated solid growth in its deposit base, which increased to PKR 525bln in CY24 (CY23: PKR 486bln), reflecting improved customer acquisition and retention. As of CY24, the current accounts of JSBL have surpassed savings accounts in contribution. This shift toward low-cost, stable funding sources is likely to improve the Bank’s funding profile and reduce the overall cost of funds. At the end of CY24, the equity base was recorded at PKR 43.7bln (CY23: PKR 40.3bln) with CAR stood at 13.24% (CY23: 12.53%). During CY24, the Bank’s net markup income recorded a healthy increase of 22% on a YoY basis to stand at PKR 27.3bln (CY23: PKR 22.4bln), attributable to a sizeable increase in markup earned recorded at PKR 109bln (CY23: PKR 92bln). The Bank’s non-markup income contracted to PKR 11.3bln in CY24 (CY23: PKR 12.2bln), primarily driven by a substantial decline in foreign exchange earnings to PKR 3.3bln from PKR 5.8bln. While dividend income improved to PKR 2.3bln (CY23: PKR 1.8bln), it was insufficient to counterbalance the drop in FX gains. Additionally, provisioning expenses escalated to PKR 4.7bln, up from PKR 2.8bln on YoY basis. Consequently, the bottom line witnessed a dip to PKR 2.8bln (CY23: PKR 4.3bln) signaling a need for greater income diversification and a more resilient non-core revenue mix to sustain profitability amid market fluctuations.
Ratings are dependent on upholding asset quality, maintaining its share of advances and deposits in the banking sector, adding diversity to the income stream while maintaining a cushion in CAR, and a strong governance framework are critical.

About the Entity
JS Bank Limited (JSBL), incorporated in March 2006, commenced its banking operations on December 30, 2006. JSBL is a subsidiary (~71.21%) of Jahangir Siddiqui and Co. Limited (JSCL), whereas the rest is widely spread. The overall control of the bank vests in the Board of Directors (Board) including the CEO. Mr. Basir Shamsie joined as CEO in July 2018. He possesses work experience of more than 33 years, primarily in the banking sector. He is supported by a team of highly qualified and seasoned professionals.