The Pakistan Credit Rating Agency Limited
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PACRA Maintains Entity Ratings of Habib Metropolitan Bank

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

Habib Metropolitan Bank is differentiated on the basis of its superb ability to serve trade-related needs of its customers, and therefore enjoys a leading position in the industry. The ratings of Habib Metropolitan Bank (HabibMetro) are vested in the brand strength of the Bank, flanked by a family of astute bankers. The Bank is also associated with a diversified and financially strong international bank - Habib Bank AG Zurich (HBZ). This association helps in assimilating the parent's best practices into HabibMetro, while fostering control environment with enhanced level of oversight. Additionally, it is a part of House of Habib, which has a strong array of business in Pakistan mainly large industrial and corporate units. The benefits continue to accrue in terms of non-markup income. The Bank has a strong forte in the business hub of Pakistan in terms of its presence and contribution of deposits and advances. The Bank grew its customer deposit base by 10.6%, wherein it enhanced its current account deposits by 21.5%. The Bank continues to remain focused on improving its deposit mix. The Bank’s emphasis in terms of its loan portfolio is evident by the growth of 28.9% in performing advances, led by its presence in textile. Overall infection ratio improved to 4.0% (CY20: 5.8%) owing to decline in absolute NPLs. Due to the low monetary policy rate for major period of CY21, as well as improved current account deposits, HMBL’s cost of funds declined, resulting in a reduced markup expensed. This resulted in inched up net mark up income of the bank. This progress, along with growth in non-markup income, resulted in the growth in profitability. As at December 31, 2021 the Bank’s CAR declined to 14.10% (CY20: 16.79%). 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 infection. This has repercussions for the entire system including banking.
The ratings are dependent on the management's ability to augment its position generally in the banking industry and particularly in its market niche - trade finance in the wake of rising competition. Any weakening in asset quality will in turn put pressure on the bank's profitability and risk absorption capacity.

About the Entity
HabibMetro, commencing operations in 1992, is listed on Pakistan Stock Exchange. The bank is a 51% owned subsidiary of HBZ. HBZ, incorporated in Switzerland in 1967, is owned and managed by the Habib family. HabibMetro makes substantial contribution towards consolidated assets of Habib Bank AG Zurich. HabibMetro has a nationwide network of 459 branches including 49 Islamic branches, spread over 166 cities. The nine-member board comprises CEO along with three representatives of HBZ, three independent directors and three non-executive directors. The CEO, Mr. Mohsin Nathani, carries experience of over 30 years in domestic and international banking industry. A professional team of senior executives assists the Chief Executive.

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.