PACRA Upgrades the Entity Ratings of JS Bank Limited

JS Bank acquired majority stake (75.12%) in BankIslami Pakistan Limited in Aug 2023, marking a significant milestone and reinforcing its position as one of Pakistan's fastest growing financial institutions. This acquisition has set JS Bank apart from the rest of its peers. The assigned ratings reflect JS Bank's consolidated position after the aforementioned acquisition. The positive fundamentals of the Islamic banking industry in general also lend support to the ratings. In addition, the ratings highlight JS Bank's growing stature, on a standalone basis, as a medium-sized bank. The management has a clear business strategy aimed at bolstering profitability through efficiency. JS Bank has increasingly gained a tech-savvy image, while continuously augmenting its futuristic layout. It has heavily invested in its digital services; "Zindigi," has become a hallmark of the bank’s digital presence. It is designed to provide Gen Z and millennials with simple, user- friendly digital financial solutions. Zindigi is fast establishing itself as one of the country's growing market place apps.
The ratings recognize a geographically dispersed and swiftly established branch network, which is expected to support the build-up of low-cost core deposit. The contribution of current account is less than desired and the management is cognizant of this and hence intends to take steps to enhance the contribution. The bank continuously shed high-cost deposit, to ensure positive return on each account. The net advances depicted a decline owing to consolidation in the bank's lending portfolio, amidst current economic landscape. Concurrently, there was a slight uptick in infection ratio, due to the aforementioned consolidation. However, the bank increased its loan loss coverage ratio, by enhancing the provisioning quantum. The investment portfolio majorly comprises government securities, titled towards floater instruments. This ensures less exposure on account of market volatility. The bank has a strong equity base. Capital Adequacy Ratio is above the regulatory requirement and depicting an upward trajectory, as the management has shown. There is an express intention shown by the management to build core capital in future. Effective governance has been crucial in guiding the bank's strategic execution, balancing sustainable shareholder value with regulatory compliance.
Ratings are dependent on JS Bank's ability to sustain positioning and also profitability trend to ensure internal generation of capital. Meanwhile, upholding asset quality and managing cost structure is important.

About the Entity
JS Bank Limited (JSBL), incorporated in March 2006, commenced its banking operations on December 30, 2006. JSBL is a subsidiary (~71.21%) of Jahangir Siddiqui and Co. Limited (JSCL), whereas the rest is widely spread. The overall control of the bank vests in the Board of Directors (BoD) including the CEO. Mr. Basir Shamsie joined as CEO in July 2018. He possesses work experience of more than 30 years, primarily in the banking sector. He is supported by a team of highly qualified professionals.