The Pakistan Credit Rating Agency Limited
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Iram Shahzadi

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PACRA Maintains Entity Ratings of First Women Bank Limited | RW and Developing Outlook

Rating Type Entity
(28-Jun-22 )
(28-Jun-21 )
Action Maintain Maintain
Long Term A- A-
Short Term A2 A2
Outlook Developing Stable
Rating Watch Yes Yes

The ratings reflect the association of FWBL with the Government of Pakistan (GoP) - the major shareholder. The Bank received various capital injections from the Ministry of Finance (MoF), latest in CY17, mainly to comply with minimum capital requirements. The bank has not been able to publish its financial statements since Dec-18 and all the numbers/financials mentioned are based on management accounts and subject to audit by an external auditor. The Board of the bank remained nonfunctional since January 2019 due to vacancies not being filled. MoF has appointed a Chairman/Director on the Board on September 09, 2021. Now with the completion of the Board, the finalization of the external audit process for the last three years should be expedited. As per the unaudited financial statements, the deposit system share inched down (end-Dec21: 0.1%, end-Dec20: 0.2%) whilst CASA went up to 79.5% (end-Dec20: 70.7%). The deployment of funds was towards government securities which recorded a sizable increase. Advances witnessed a marginal uptick. It remains essential to hold and improve asset quality. The bank's financial performance deteriorated during CY21. Total income recorded a decline to PKR 1.1bln in CY21 (CY20: PKR 1.5bln); mainly emanating from a decline in non-markup income. Higher provisioning expense was recorded which affected the bottom line and the bank reported a loss of PKR 1,730mln (CY20: profit of PKR 373mln). The current management team took initiatives to improve the revenue stream and managed to contain the cost. Bank's PAT for 3MCY22 clocked at PKR 47mln. The Bank’s investment portfolio is entirely comprised of government securities. Going forward, the management is planning to take various strategic initiatives including, improvement of net spread through reducing its funding cost, expansion of retail customer base through launching BDO model, improving lending business through onboarding investment grade rated corporate, SME business, and re-branding corporate image. Outlook captures the delay in the finalization of financial statements, diluted performance, and erosion of equity base over the last few years.
The ratings capture the need to sustain a growth trend in profitability and deposits. Revision and successful execution of the business strategy, while improving the efficacy of the risk management framework to improve asset quality.

About the Entity
First Women Bank Limited (FWBL) was established in 1989. The bank operates through a network of 42 branches spread over 24 cities nationwide as of Dec-21. The bank focuses on catering to women at all levels of economic activity; micro, SME, and corporate. The Government of Pakistan owns a majority stake - ~85% (~83% through the Ministry of Finance and ~2% through NBP) in the bank. The rest of the shareholding comprises four large banks (ABL, UBL, HBL, and MCB). MoF has appointed Chairman/Directors on the Board in September 09, 2021. The overall control of the Bank vests with a six-member Board of Directors (BoD) including the CEO/ President. Mr. Najeeb Agrawalla is the Chairman of the Board and has 31 years of experience. All the other board members have different educational and work experience backgrounds. Mr. Farrukh Iqbal Khan is appointed by Ministry of Pakistan (MoF) Government of Pakistan on December 30, 2019 as President & CEO of First Women Bank Limited. He has joined as President/CEO of First Women Bank Limited on January 03,2022. He is a veteran banking professional with 28 years of diversified experience.

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.