PACRA Maintains Rating of Askari Bank Limited | TFC VI (Additional Tier I) | July-18

The assigned ratings of Askari Bank (the "Bank") are underpinned by its strong and well-established ownership structure. The Bank’s brand strength is further reinforced through its association with the Fauji Group, one of the country’s leading and diversified conglomerates. This relationship provides key strategic advantages, including improved market reach, stronger customer confidence, and access to a stable and diversified deposit base. Under the new leadership, the Bank has increasingly become growth-oriented and conscious towards improving service quality and deepening of customer relationships. During 2025, Askari Bank delivered strong financial performance, demonstrating resilience and disciplined execution in a challenging operating environment characterized by compressed interest margins. The Bank’s results are supported by its solid franchise and a sustained emphasis on low-cost deposit mobilization. The expanding outreach, supported by digital onboarding and transaction banking initiatives, is further strengthening its deposit franchise. The Bank’s mobile banking platform, with more than one million users, offers a range of digital services including digital onboarding, cardless cash withdrawals, AI-enabled advisory features, and enhanced customer engagement tools. In addition, 11 digital lobbies were made operational during the year, reflecting continued investment in technology and service enhancement. Total assets grew by 15.9% to PKR 2,895.0bln (CY24: PKR 2,498.4bln), mainly driven by a 34.4% increase in investments to PKR 2,028.7bln. Net advances declined by 15.6% to PKR 586.6bln (CY24: PKR 695.7bln) as the Bank maintained a cautious lending stance. Profit before tax increased by 19.7% to PKR 53.3bln (CY24: PKR 44.5bln), while net profit rose to PKR 22.8bln (CY24: PKR 21.0bln), with growth partially offset by a higher effective tax charge. Shareholders’ equity expanded by 24.8% to PKR 151.7bln (CY24: PKR 121.6bln). The Bank maintained a strong capital position, with a Capital Adequacy Ratio (CAR) of 21.59% (CY24: 21.40%), providing ample buffer to support future growth and absorb potential shocks.
The Bank is committed to maintaining capital ratios well above prescribed thresholds for better risk absorption capacity. The TFC's rating depends on the Bank's ability to maintain its competitive position.

About the Entity
Askari Bank Limited was incorporated in 1991. The Fauji Consortium is the key sponsor, holding a 71.91% stake in the Bank, while the remaining 28.09% shareholding is widely held by financial institutions and the general public. Currently, overall control of the Bank vests in the eleven-member Board of Directors (BoD), including the President and CEO. Mr. Zia Ijaz is the President and CEO of the Bank. He is a Fellow Chartered Accountant (FCA) and a member of ICAP Pakistan, with extensive experience across leading commercial banks in Pakistan and abroad.

About the Instrument
Askari Bank issued TFC VI (Additional Tier I) of PKR 6bln in Jul-18 to contribute towards AKBL’s Tier I capital for complying with the CAR requirement. The TFC is an Over the Counter (OTC), listed, unsecured, subordinated, perpetual, and non-cumulative instrument. The profit rate is 6MK+1.5% and is being paid semi-annually in arrears on the outstanding principal amount. Neither profit nor principal will be payable in respect of TFC if such payment results in a shortfall in the Bank’s MCR or CAR. The Bank may call the TFCs, with prior approval of SBP, after five years from the date of issue. The TFCs shall, if directed by the SBP, be fully and permanently converted into ordinary shares and/or have them immediately written off upon the PONV Trigger Event. The Bank has paid the profit payment of Tier-I TFC due in Jan 2026; the next payment is due in July 2026.