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

Askari Bank's ("AKBL" or the "Bank") assigned ratings benefit from a robust and distinguished ownership structure. The Bank’s strong brand image is further reinforced by its affiliation with the Fauji Group—one of the country’s most prominent conglomerates. This strategic association has translated into tangible advantages, including enhanced market penetration, elevated customer confidence, access to diversified and sustainable funding sources, and the development of both interest-based and non-interest based income streams. During the year, the Bank expanded its branch network by opening 37 new branches, bringing the total to 757 branches, including its international presence in Bahrain and Beijing. The Bank is pursuing conversion of its conventional banking business to Islamic, and at present, over 50 percent of the branch network is Islamic, offering Shariah-compliant products and services, and the remaining branches are also offering Islamic banking deposit products through Islamic Windows. AKBL has also made focused efforts to promote business from China, leveraging the positive spillover effects of Chinese investment in Pakistan. Backed by the Fauji Group, the Bank leveraged partnerships with 551 global institutions across 80 countries to boost trade and remittances, while net markup income surged by 47.3% to PKR 65.3bln (9MCY24: PKR 44.3bln), driven by robust investment and markup income. As of 9MCY25, Askari Bank experienced an 11.1% growth in its rock-solid deposits given its exclusive franchise, reaching PKR 1,515.2bln (CY24: PKR 1,363.7bln), with a predominant focus on current deposits. Notably, a significant increase in its investment book during 9MCY25, which stood at PKR ~1,968.5bln, mainly invested in Government securities, compared to CY24: PKR 1,509.7bln. Infection ratio stood at 5.9% (CY24: 4.7%), while NPL coverage ratio is reported at 113%, reflecting a comfortable provisioning buffer that fully covers impaired loans and provides resilience against potential credit shocks, thereby reinforcing the Bank’s prudent risk management posture. The Bank's CAR improved to 22.7% (CY24: 21.4%).
The Bank aims to maintain capital buffers above requirements, while ratings depend on sustained competitiveness, controlled funding costs, and preserved asset quality.

About the Entity
Askari Bank Limited, incorporated in 1991, operates with a network of 757 branches as of Dec'25. The Fauji Consortium is the key sponsor, holding a 71.91% stake in the Bank. The remaining 28.09% shareholding is widely spread among 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, a seasoned banker with over three decades of extensive banking experience, having held senior leadership roles in leading banks in Pakistan and abroad, serving as the President and CEO of the Bank.

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.