JCR-VIS Reaffirms Entity Ratings of Pak Oman Investment Company Limited

Karachi, June 27, 2018 (PPI-OT): JCR-VIS Credit Rating Company Limited has reaffirmed the entity ratings of Pak Oman Investment Company Limited (POIC) at ‘AA+/A-1+’ (Double A Plus/A-One Plus) with a ‘Stable’ Outlook. The previous rating action was announced on June 2, 2017.

The ratings reaffirmation takes in to account the company’s joint venture shareholding structure along with strong investors’ profile of two major sovereign owners; sovereign ratings of Sultanate of Oman have been recently revised, by international rating agencies, due to weakening in economic indicators. Ratings, however, take in to account the comfortable capitalization levels, sound business risk profile and commitment of financial support from sponsors.

The ratings further factor in the healthy growth witnessed in lending portfolio where gross advances have increased to Rs. 19.7b (FY16: Rs. 15.9b) at end-FY17 on account of an aggressive strategy undertaken by the management coupled with a focus to improve loan quality. POIC have reputed clients with whom the company has well established relationships, resulting in repeat business over years. Sector-wise composition of advances depicts adequate diversification, while client-wise concentration risk remained on higher side due to limited client base. Asset quality indicators continue to improve over the years while management anticipates infection levels to reduce even further given its recovery efforts and overall growth in portfolio. Trends in this regard would be tracked, going forward.

During the outgoing year, volumetric growth in earning assets contributed positively to net mark-up income. However, lower investment income along with the imposition of super taxation offset the impact of higher lending, resulting in a decline of profit after tax. Going forward, company’s ability to maintain earnings and mark-up spreads at sustainable levels will be important. Liquidity profile of the company as manifested in liquid assets in relation to total deposits and borrowings ratio is considered commensurate with the assigned ratings. Moreover, growth in advances has resulted in lower Capital Adequacy Ratio (CAR); albeit the same remains comfortably above the regulatory requirement.

For more information, contact:
CFA
JCR-VIS Credit Rating Company Limited
VIS House, 128/C,
25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: sobia@jcrvis.com.pk

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JCR-VIS Reaffirms Entity Ratings of Pak Oman Investment Company Limited

Karachi, June 27, 2018 (PPI-OT): JCR-VIS Credit Rating Company Limited has reaffirmed the entity ratings of Pak Oman Investment Company Limited (POIC) at ‘AA+/A-1+’ (Double A Plus/A-One Plus) with a ‘Stable’ Outlook. The previous rating action was announced on June 2, 2017.

The ratings reaffirmation takes in to account the company’s joint venture shareholding structure along with strong investors’ profile of two major sovereign owners; sovereign ratings of Sultanate of Oman have been recently revised, by international rating agencies, due to weakening in economic indicators. Ratings, however, take in to account the comfortable capitalization levels, sound business risk profile and commitment of financial support from sponsors.

The ratings further factor in the healthy growth witnessed in lending portfolio where gross advances have increased to Rs. 19.7b (FY16: Rs. 15.9b) at end-FY17 on account of an aggressive strategy undertaken by the management coupled with a focus to improve loan quality. POIC have reputed clients with whom the company has well established relationships, resulting in repeat business over years. Sector-wise composition of advances depicts adequate diversification, while client-wise concentration risk remained on higher side due to limited client base. Asset quality indicators continue to improve over the years while management anticipates infection levels to reduce even further given its recovery efforts and overall growth in portfolio. Trends in this regard would be tracked, going forward.

During the outgoing year, volumetric growth in earning assets contributed positively to net mark-up income. However, lower investment income along with the imposition of super taxation offset the impact of higher lending, resulting in a decline of profit after tax. Going forward, company’s ability to maintain earnings and mark-up spreads at sustainable levels will be important. Liquidity profile of the company as manifested in liquid assets in relation to total deposits and borrowings ratio is considered commensurate with the assigned ratings. Moreover, growth in advances has resulted in lower Capital Adequacy Ratio (CAR); albeit the same remains comfortably above the regulatory requirement.

For more information, contact:
CFA
JCR-VIS Credit Rating Company Limited
VIS House, 128/C,
25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: sobia@jcrvis.com.pk

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