PACRA Maintains Entity Ratings of Pakistan Kuwait Investment Company (Pvt.) Limited
JVFIs are largely engaged in providing credit lines on turf common to commercial banks, however there has been limited growth in advances. Their ratings are mainly characterized by sovereign ownership and relatively conservative risk appetite. The ratings are underpinned by strong capitalization, a diversified revenue stream, sound liquidity, and efforts of the senior management to implement shareholders’ strategic goals and vision. PKIC's rapid yet prudent growth trajectory is evident in more than double growth in advances portfolio encapsulating export-oriented industries, infrastructure development and power with key emphasis on green financing. This was supplemented with a manifold growth in deposit base which were recorded at PKR 6.3bln as at end-Dec21. Despite the significant growth in advances, the credit quality of portfolio was maintained and the infection was contained at the historical figure. The net markup income enhanced attributable to improved markup earned from advances and investments. The buildup of strategic equity investments in different companies provides a strong and stable income stream in the shape of sustainable dividend stream. Additionally, fee income recorded more than double growth. Assets and investments growth led to sizeable growth in total assets during CY21. Treasury policy allows the weighted average duration of investment portfolio up to four years whilst dictates effective monitoring of yield curve for future strategy. The company has focused on treasury operations where it is enhancing its participation in the money market. The liquidity profile of the institution remains comfortable with access to financial institutions to support its treasury and lending operations. A strong equity base and minimal drag of NPLs on equity are positive. Going forward, PKIC will continue to support Pakistan’s economic growth through strategic investments across diverse segments while continued emphasis on improving profitability. Emphasis shall be to support financial inclusion by applying for a digital banking license, fostering startups via establishing a Venture Capital Fund, and capitalizing on growth opportunities via a Private Equity Fund. PKIC also plans to launch its own Islamic Financing Division to capture the growth potential in the shariah-compliant financing opportunities. PKIC also intends to invest in Real Estate Investment Trust (REIT) to capitalize on opportunities available in the real estate sector.
The ratings are dependent on the management's ability to sustain its financial profile while managing the associated risks. Management’s efforts to diversify its operations, and find a new niche for growth, while sustaining its profitability would remain critical.
Pakistan Kuwait Investment Company (Private) Limited was established in March 1979 as a joint venture between the Governments of Pakistan and Kuwait. It is equally owned by the Government of Pakistan through the State Bank of Pakistan (SBP) and the Government of Kuwait through the Kuwait Investment Authority (KIA), representing their respective governments. The governments of Kuwait and Pakistan have been rated “A1 (Stable)” and “B3 (negative)” respectively, by Moody’s in 2022. The overall control of the company vests in the six-member board of directors including the CEO and five non-executive directors having equal representation from both governments. Mr. Mubashar Maqbool, Pak Kuwait’s MD, has diversified experience in Development, Commercial and Investment Banking and is associated with the company since March 2019.