The Pakistan Credit Rating Agency Limited
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Sehar Fatima

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PACRA Maintains Entity Ratings of Bank AL Habib Limited

Rating Type Entity
(25-Jun-22 )
(26-Jun-21 )
Action Maintain Upgrade
Long Term AAA AAA
Short Term A1+ A1+
Outlook Stable Stable
Rating Watch - -

The ratings of the Bank reflect its enduring and sustained emphasis on reinvigorating its relative positioning in the peer universe. While the competitive landscape has been increasingly intensified, the Bank, under its able leadership, is taking measurable steps to remain competitive, indeed, improve its positioning. Bank AL Habib has been portraying a history of stable and consistent growth for more than a quarter of a century. The Bank's superior standing was witnessed in the global financial crisis almost a decade ago. The trend continued to this day and is reflected in the sound asset quality of the Bank. The Bank continued with its strategy for outreach expansion - adding significant branches every quarter to enhance geographical concentration. The rating reflects the Bank's improved performance, exceptional asset quality, strong financial profile and healthy liquidity. The Bank’s customer deposits increased to PKR 1,344bln as at end-Mar22 (end-Dec21: PKR 1,275bln, end-Dec20: PKR 1,083bln), subsequently, system share of the Bank enhanced (CY21: 6.5%; CY20: 6.4%). Advances base of the Bank recorded sizable increase to stand at PKR 747bln (CY21: PKR 734bln). CAR recorded dilution to 13.5% (end-Dec20: 15.1%). Prudent management of CAR remains of vital importance, going forward. Exceptional asset quality - lowest infection ratio in industry, maintained for last many years is reflective of Bank's strength. During CY21, the Bank’s net profit increased to PKR 18.7bln (Dec-20 PKR 17.8bln) driven by increase in non-markup income. During 1QFY22, the trend continued as Profit After Tax grew by ~8% YoY to stand at PKR 4.9bln. Trade finance is the Bank's hallmark. The rating draws comfort from the Bank's experienced management team, prudent risk management policies, deep-rooted relationship with clients - borrowers as well as depositors. Pakistan’s economy has gone through several varied phases in last two years due to the COVID19 pandemic. Banking sector continued to flourish with high profitability. Going forward, the macro-economic environment is beset with myriad challenges due to heightened interest rate, tightening of demand, rupee depreciation and higher inflation. This has repercussions for all segments of the economy.
The rating is dependent on the Bank's sustained risk profile. In the wake of heightened competition, profitable growth is a challenge while retaining the relative positioning in the industry. The equity base of the Bank and CAR are satisfactory and may continually be enhanced. The Bank is enhancing its footprints in the broad financial spectrum, which is essential to meet customers' needs. Digital transformation is very important. BAHL is also into the acquirer business.

About the Entity
BAHL, incorporated in Oct 1991, operates with a network of 986 branches/sub-branches, including 142 Islamic Banking branches at end-Mar22. The sponsors of BAHL are members of the Habib Family – one of the oldest and most distinguished names in Pakistan’s banking sector. BAHL’s ten-member BoD includes representatives of Habib Family and independent members. Mr. Mansoor Ali Khan, the Bank’s CEO, has been associated with the Bank for more than 25 years. He is backed by a team of experienced professionals, most of whom have long association with the Bank.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.