Lahore, June 30, 2015 (PPI-OT): The Pakistan Credit Rating Agency (PACRA) has maintained the long-term and short-term entity ratings of Bank Alfalah Limited (BAFL) at “AA” (Double A) and “A1+” (A One Plus), respectively. The ratings of two unsecured subordinated TFCs issues, of PKR 5bln each, have been maintained at “AA-” (Double A minus). Meanwhile, “Positive Outlook” has been assigned to these ratings. These ratings denote a very low expectation of credit risk emanating from a very strong capacity for timely payment of financial commitments.
The ratings reflect demonstrated efficacy of BAFL’s business strategy to fortify its established position in the domestic banking landscape while ensuring consistent profitability. Extended outreach helped in augmenting deposit base at higher pace than industry. Improving operational efficiencies rationalized the drag of net non-earning assets on the bank’s earning profile. Operating cost – a key challenge – was contained on YoY basis; though still higher than peers.
Despite consistent improvement in the bank’s profitability, capital augmentation was limited due to dividend payout and relatively higher credit growth. This, in turn, left limited cushion in Tier-I capital. Despite accretion in gross infection, success in recoveries benefited BAFL’s asset quality. The ratings recognize demonstrated support of Abu Dhabi group as a key factor.
The positive outlook assigned to the ratings captures the bank’s ability to foster its profile amid competitive banking landscape. Strengthening of the bank’s capitalization – mainly Tier 1 – further granularity in its advances and deposits book, rationalizing advances concentration, and sustaining asset quality are critical for upward rating trajectory.
For more information, contact:
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425