PACRA Maintains Entity Ratings of JS Bank Limited – JS Bank PPTFC Dec-16

Lahore, December 20, 2017 (PPI-OT):The ratings reflect improving relative position of JS Bank in the country’s competitive banking landscape. This stems from enhanced system share in deposit. The bank added a sizable amount of PKR 58bln to its deposit base YOY basis at Sep-17. The bank’s borrowings from financial institutions increased, alongside rise in SBP refinance. The increased liquidity has been deployed in advances (77% rise on YOY basis). The growth is substantial and needs continuous vigilance. The comforting factor is sizeable uptick in total investment book, of which government papers are dominant.

The current NPLs absolute amount is low. The strategy of the bank is i) to foster penetration of existing network beyond 306 branches over the near-term; ii) spread advances book through different products over multiple sectors; iii) build non-fund based income; and iv) hold strength in treasury operations. The challenge to profitability is drying return of capital gains and reduced NIMR margin. JS Bank has adequate capital level (CAR at end-Sep17: ~10.7% primarily tier I). This is expected to improve after issuance of fresh Tier II.

Ratings are dependent on JS Bank’s ability to maintain its growth continuously to establish itself in the medium-sized banking space of Pakistan. Meanwhile, upholding asset quality, maintaining system share in terms of advances and deposits, adding diversity to income stream, sound CAR and strong governance framework are critical.

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

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