Lahore, December 29, 2017 (PPI-OT):The ratings primarily reflect strong association of FWBL with the Government of Pakistan (GoP) – the major shareholder – demonstrating continued commitment and support. Subsequent to injection of equity of PKR 1bln over last two years, GoP has injected another PKR 500mln in 1QCY17. The bank thus has reached to a capital of PKR ~4bln. The management has brought clarity to strategic direction of the bank with independent focus on commercial and developmental mandate of FWBL.
During CY16, as the spreads further squeezed, business margins were challenged, hence, the bank booked loss for the year after recording profit in previous year; hence profitability is a challenge. The bank’s high cost operational structure and provision expense on increasing non-performing loans continued to drag the performance. Cognizant of the matter, the management targets volumetric growth in deposits and advances, herein, a new IT system is being implemented and synergies are being explored with other institutions to lend profitably with limited risk exposure. The management is focusing to reduce its funding cost; thereby improving its spreads. Meanwhile, given recent capital compliance, the management has resources and clarity available to implement its business plan.
The ratings are dependent on the bank’s ability to achieve bottom-line profitability on a sustainable basis. Successful execution of the new business strategy, while improving efficacy of the risk management framework to improve asset quality – which is currently suppressed – remains important.
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