PACRA maintains Debt Instrument Rating of Samba Bank Limited | PPTFC

The credit rating of Samba Bank Limited (“Samba” or the "Bank”) is underpinned by the strong sponsorship of its parent entity, Saudi National Bank (SNB) — the largest commercial Bank in the Kingdom of Saudi Arabia (KSA). The Samba Bank continues to actively optimize its earning asset mix in line with its credit risk strategy. During the period 9MCY25, the Bank strategically expanded its investment portfolio by Rs. 39.9bln, which was partially offset by a Rs. 4.1bln reduction in the loans and advances book. On the funding side, interbank borrowings increased by Rs. 30bln, whereas customer deposits increased by Rs. 10.7bln, representing a 10% increase. However, in light of the declining policy rate environment, the Net Interest Income (NII) decreased by 23%, amounting to Rs. 4.3bln (9MCY24: Rs. 5.6bln). Meanwhile, non-interest income remained relatively stable over the period. As a result, the Bank’s Profit After Tax (PAT) declined to Rs. 472mln, compared to Rs. 766mln in 9MCY24. This decline is primarily attributable to a compression in Net Interest Margins (NIMs) and a rise in operating expenses, largely driven by the ongoing branch network expansion and technology upgrade initiative. As of September 2025, the Bank’s Capital Adequacy Ratio stood at 24.6% (CY24: 23.8%). The consistent improvement in CAR over the years highlights the Bank’s strengthened risk absorption capacity, which underpins the stability of its credit profile and supports the currently assigned rating for its debt instruments. The Bank expanded its physical presence by adding 8 new branches, bringing the total to 65, with plans to open more during CY25 in different strategic locations across Pakistan to boost customer acquisition and market reach. On the digital front, an enhanced Mobile and Internet Banking platform was launched, demonstrating the robustness and scalability of the Bank’s digital infrastructure. In alignment with its Islamic Vision 2027, the Board of Directors has, in principle, approved the Bank’s strategic plan to transition from a conventional to a full-fledged Islamic Bank. This would align its operations with Shariah principles while catering to evolving customer preferences in the local market. On March 13, 2025, the State Bank of Pakistan (SBP) granted In-Principle approval to Samba Bank Limited (SBL) to commence Shariah-compliant business and operations, subject to the completion of the prescribed regulatory requirements and conditions.
The rating relies on the key factors which 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 primarily owned by Saudi National Bank of Saudi Arabia, which holds an 84.51% stake. The Bank's CEO Mr. Ahmed Tariq Azam has resigned on 27th Apr'2025. Mr. Rashid Jahangir has been appointed as acting President and CEO of the bank with effect from May 22, 2025 till the time permanent President and CEO is appointed in due time.

About the Instrument
Samba Bank issued PKR 5,000mln worth of PPTFC-Tier II TFCs ("TFCs") in March 2021, priced at 6-month KIBOR plus 135 basis points per annum, payable semi-annually. The TFC, with a tenor of 10 years, is callable from March 2026 with prior SBP approval. It is unsecured, subordinated to all other bank debts, and cannot be redeemed before maturity without SBP approval. Notably, the lock-in clause prohibits payment of profit or principal if it would breach MCR or CAR requirements. Additionally, it includes a loss absorbency clause where, upon a Point of Non-Viability event, SBP can convert the TFCs into common shares or write them off. As of September 2025, the Bank has duly executed its ninth scheduled profit disbursement, amounting PKR 331.4 million.