PACRA Maintains Entity Ratings of Askari Bank Limited

Askari Bank's ownership structure is distinguished, lending credence to its assigned rating. The Bank's solid brand reputation is notably bolstered by its affiliation with the Fauji Group conglomerate. This partnership has yielded significant benefits, including increased market penetration, heightened customer confidence, diversified and sustainable funding sources, and avenues for generating both interest-based and non-interest-based income streams. The Bank has made concentrated efforts to promote business from China, and leveraged on the positive spillover of Chinese investment in Pakistan. In order to boost international trade and remittances, the Bank, by utilizing the correspondent relationship with 670 Banks in 88 countries around the world, focused on tapping new markets in Europe Southeast Asia, and the Middle East. In CY23, net markup income increased by 48.7% clocked at PKR 59.4 bln, with a substantial portion derived from investment earnings. The Foreign exchange income constitutes the largest share of non-mark-up income, followed by fee and commission income. As of Dec'23, Askari Bank experienced a 13% growth in its rock-solid deposit given its exclusive franchise, reaching PKR 1,293bln, with a predominant focus on savings deposits. However, the Bank's share of customer deposits decreased to 4.5% (from 5.1% in CY22).
The Bank's strategic use of funding sources has supported its growth initiatives. Notably, there has been a substantial expansion in the Bank's loan portfolio, at the end of Dec'23 the gross advances stood at PKR ~661.3bln (CY22: PKR~ 614.9bln), accompanied by a significant increase in its investment book, which stood at PKR ~1,182.5bln majorly invested in Government securities compared to (CY22:762.6bln). The Bank's asset quality demonstrated improvement, with the infection ratio declining to 4.4% in CY23 (CY22: 5.1%). The Bank's CAR improved to 18.35% (CY22: 15.9%). The management is actively pursuing initiatives to enhance business sustainability, with a strategic focus on Islamic Banking and the expansion of Shariah-compliant product offerings. Under the guidance of its Shariah Board and professional Bankers, Askari Ikhlas Islamic Banking offers a diversified range of Shariah-compliant products and services to its valued customers to fulfill their Banking needs. Presently working with 140 dedicated Islamic Banking branches. While prioritizing digital transformation, the Bank has taken steps to strengthen its digital footprints. With user-friendly interfaces and robust security measures, the Bank provides seamless access to a wide range of Banking services from account management to funds transfer and bill payments, from educational payments to charity & donations, Personal Finance Management (PFM), transaction Banking, and employee Banking.
The ratings depend on the Bank's ability to maintain its competitive position. Going forward, prudent management of funding costs is crucial, and maintaining asset quality remains essential.

About the Entity
Askari Bank Limited, incorporated in 1991, operates with a network of 660 branches as of Dec'23. Fauji Consortium is the key sponsor (71.91%) stake. The remaining (28.09%) shareholding is widely spread among financial institutions and the general public. Currently, overall control of the Bank vests in the eleven-member Board of Directors (BoD) including the President and CEO. Five of the board members are Fauji Foundation nominees; four are independent members, while one represents NIT. Mr. Atif Riaz Bokhari has resigned from the President & CEO of Askari Bank Limited. Currently Mr. Saleem Anwar is Acting CEO of the Bank. He is a Chartered Accountant and have extensive experience in the Banking industry of Pakistan.