Lahore, June 27, 2018 (PPI-OT):The ratings reflect the sustained risk profile of Bank of Punjab (BoP) with an appreciable improvement in profitability and asset quality over the last few years which supplemented the equity base. During current year, the bank has recorded commendable uptick in revenue base – both interest earned and income from fee, commission. However, the bank recorded loss for the year on account of providing for certain infected exposures which were previously secured by Letter of Comfort (LoCs) by the sponsor.
Hence, the bank’s recorded significant improvement in its coverage ratio. The bank’s bottom-line again turned green in 1QCY18. The bank witnessed reduction in the non-performing loans inherited by the current management. The bank’s Capital Adequacy Ratio (CAR) clocks in at 9.73% at Dec’17 which improved to 10.53% in 1QCY18. Tier-I CAR declined to 7.61% (Dec’16: 9.40%) due to provisioning against NPLs earlier covered under LOCs.
The bank enjoys relaxation from the applicable CAR till Jun’18 granted by the State Bank of Pakistan. Timely re-couping the CAR is essential to ratings. The bank envisages growth in advances wherein the criteria is higher margins with sustained risk profile. Meanwhile, expansion in deposit base with low cost focus, while attracting a wide customer range, is on the cards.
The ratings are dependent on the financial risk profile of the bank, mainly emanating from sustenance of capital adequacy and continued healthy profitability trend in line with the management’s plans. Meanwhile, improvement in asset quality and upholding better governance standards remain imperative.
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