PACRA Maintains the rating of JS Bank Limited | Tier II TFC | 3.5bln | Aug-23

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% at 9MCY25 (CY24: 4%) based on customer deposits. JSBL, a tech-driven mid-sized Bank, is stabilizing its market position by leveraging its regional presence and diverse product offerings. 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. At the end of 9MCY25, Zindigi's throughput rose to PKR 265bln (CY24: PKR 206bln), deposits hit PKR 6.8bln (CY24: PKR 6.7bln), and downloads grew 8% to 13.31mln (CY24: 12.3mln). At the end of 9MCY25, the Bank’s gross performing advances stood at PKR 196.1bln (CY24: PKR 226.4bln). However, gross non-performing advances (NPLs) increased to PKR 23.3bln (CY24: PKR 21.3bln), leading to a rise in the infection ratio to 10.6% from 8.6% (CY24). The investment portfolio is majorly composed of government securities, with a tilt towards floating-rate instruments. JSBL demonstrated growth in its deposit base, which increased to PKR 556bln in 9MCY25 (CY24: PKR 525bln), reflecting improved customer acquisition and retention. At the end of 9MCY25, the equity base was recorded at PKR 46.4bln (CY24: PKR 43.7bln) with CAR stood at 13.94% (CY24: 13.24%). At the end of 9MCY25, net markup income remained intact on YoY to stand at PKR 20.3bln (9MCY24: PKR 19.9bln). Non-markup income of the Bank improved to PKR 10.9bln (9MCY24: PKR 9.8bln), primarily supported by increased fee and commission income along with a 1.2x increase in gains on securities. However, non-markup expenses increased by 11% YoY to PKR 22.0bln (9MCY24: PKR 20.0bln), indicating elevated cost pressures. Provisioning charges of the Bank remained intact at PKR 3.2bln (9MCY24: PKR 3.2bln). Consequently, a minor dip has been observed in profitability to PKR 2.6bln (9MCY24: PKR 3.1bln) driven by an increase in operating expenses and a decrease in FX income, signaling a need for greater income diversification and a more resilient non-core revenue mix to sustain profitability.
The ratings depend 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
JSBL incorporated in March 2006, commenced its banking operations on December 30, 2006. JSBL is a subsidiary (~71.21%) of JSCL, whereas the rest is widely spread. The overall control of the Bank vests in the 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.

About the Instrument
The Bank has issued a Privately placed, Unsecured, Subordinated Tier 2 TFC ("TFC") for PKR 3.5bln on Aug 30, 2023 to contribute towards JSBL’s Tier 2 Capital. The tenor of the TFC is 10 years and carries a profit rate of 3MK+2%. The Bank may call the TFCs, with prior approval of SBP, after five years from the date of issue. Neither profit nor principal will be payable if such payment will result in a shortfall in the Bank’s MCR or CAR. The latest payment (Principal+Interest) of PKR 115mln has been made at the end of Nov 28, 2025.