Analyst
Muhammad Obaid
muhammad.obaid@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
PACRA Maintains Entity Ratings of Habib Metropolitan Bank Limited
Rating Type | Entity | |
Current (27-Dec-18 ) |
Previous (28-Jun-18 ) |
|
Action | Maintain | Maintain |
Long Term | AA+ | AA+ |
Short Term | A1+ | A1+ |
Outlook | Stable | Stable |
Rating Watch | - | - |
The ratings incorporate HabibMetro's association 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. The ratings recognize the bank's healthy financial profile. There has been a dip in CAR in the recent period, although it still remains strong and primarily constitutes Tier I. The bank has experienced uptrend in profitability in nine months period. With dynamic competition in the market, holding onto a sustained market share (deposits and advances) with profitable growth has become increasingly difficult. Competition has intensified in the forte of the bank: trade business. The bank’s strategy envisages re-orientation of the bank towards supply chain. The bank experienced relatively high infection compared to most peers, though these are considerably covered. NPL's are decreasing, management's efforts are translated in improved asset quality. The bank needs to diversify its deposit base.
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 326 branches including 29 Islamic branches, spread over more than 98 cities.
The nine member board comprises CEO along with two representatives of HBZ, three independent directors and three non-executive directors. The CEO, Mr. Mohsin Nathani, carries experience of over twenty-five in domestic and international banking industry. A professional team of senior executives assists the Chief Executive.