PACRA Assigns Initial Rating to JS Bank Limited | PPTFC Tier 2 Capital | PKR 4.0bln | Jul-26

The assigned ratings of JS Bank Limited (“JSBL” or the “Bank”) reflect the stable market positioning, sound financial profile, and expanding customer franchise, underpinned by its continued emphasis on technology-driven banking solutions. The Bank’s strengthened positioning following the acquisition of majority stake in BankIslami Pakistan Limited has enhanced its scale and market outreach. It has developed a strong technology-driven profile through continued investment in digital banking services, with “Zindigi” emerging as a key pillar of its digital presence. During CY25, the Bank’s advances portfolio grew by 11%, primarily driven by the individual, wholesale & retail trade, and financial sectors, reflecting the management’s continued focus on expanding its core lending franchise. Asset quality pressure was evident with non-performing loans standing at PKR 23.2bln (CY24: PKR 21.3bln); however, the Bank maintained adequate provisioning buffers. The Bank also continued to strengthen its funding profile during CY25, supported by growth in deposits and improved franchise penetration. Importantly, current accounts surpassed savings accounts in contribution, reflecting a favorable shift toward granular and low-cost funding sources, expected to support margin stability and reduce funding costs going forward. As of CY25, the equity base was recorded at PKR 46.7bln (CY24: PKR 43.7bln). The Bank’s CAR stood at 13.12% at the end of CY25 (CY24: 13.24%), remaining above the regulatory requirement. During CY25, the Bank’s performance remained satisfactory despite margin pressures arising from the declined interest rate environment. Net markup income remained broadly stable at PKR 27.1bln (CY24: PKR 27.3bln), supported by volumetric growth and improvement in deposit mix. Going forward, the Bank’s strategy remains focused on strengthening its low-cost deposit franchise, expanding digital banking penetration, and improving operational efficiency. Furthermore, the Bank issued Tier II bond on Jul 06, 2026, to strengthen the capitalization profile and provide additional cushion for future growth.
The ratings remain dependent on the Bank’s ability to maintain asset quality, preserve capitalization buffers, and diversify income streams while sustaining strong governance standards. Although the rising interest rate environment may lead to revaluation losses, the impact is expected to be mitigated through improved margins, stronger profitability, and growth in the equity base.

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.

About the Instrument
The Bank issued rated, privately placed, unsecured, subordinated and subsequently listed Term Finance Certificate Issue ("TFC") (under the Privately Placed Debt Securities Listing Regulations of the PSX Rule Book) of PKR 4bln with a tenor of ten years. The TFC carries a profit rate of 3M KIBOR plus a spread of 2%, payable quarterly. It will be redeemed 0.24% of the issue amount during the first nine years after the issue date and remaining 99.76% in four equal quarterly installments of 24.94% each in the last year. It includes a call option after five years but no put option. Payments of principal or profit are restricted if they breach the Bank’s MCR, CAR or leverage ratio. The TFC is also subject to loss absorbency provisions, allowing SBP to require conversion into ordinary shares or write-off upon a Point of Non-Viability (PONV) event.