PACRA Maintains Entity Ratings of Soneri Bank Limited TFC II

Lahore, December 15, 2017 (PPI-OT):The ratings reflect Soneri Bank’s sustained business profile; system share remained intact YoY. There was a meagre increase in deposit base – lower than average industry. The bank continues to make fresh deployment in advances, hence an increase was witnessed in the bank’s ADR – which is comparatively higher than industry average. The reduction in net interest revenue translated into reduced profitability YoY, a factor of squeeze in spreads – an industry wide phenomenon.

Going forward, the bank, while focusing to improve asset quality, intends to follow a prudent strategy in terms of advances growth. Enhancing non-fund based exposure, in turn fee income and would be targeted while capitalizing on potential business opportunities expected from China-Pakistan Economic Corridor. At the same time, the strategy would be to mobilize low-cost deposits with an increase in branch network. The bank’s CAR reduced to 13.0% (end-Dec16: 14.1%) primarily on account of increase in risk weighted assets.

The rating is dependent on the bank’s ability to maintain its market position in banking industry while strengthening its overall risk profile. Bringing efficiency in overall operational structure is important to rationalize costs. In comparative landscape, adding granularity to core operations – deposits and advances – is critical. Meanwhile, sustainable increase in system share and consequent profitability would be ratings positive.

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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