The Pakistan Credit Rating Agency Limited
Press Release


Usama Liaquat

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PACRA Maintains Entity Ratings of Escorts Investment Bank Limited

Rating Type Entity
(09-Apr-20 )
(18-Oct-19 )
Action Maintain Maintain
Long Term A- A-
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

The ratings reflect the financial strength of the bank. The strength was embodied hitherto in the subordinated loan given to the bank and lately of which the intended amount has been converted into equity, pursuant to the right issue exercise undertaken by the bank. As a consequence, the equity base of the bank has been augmented manifold. The financial strength is also reflected in that the bank has strong liquidity available in the form of TDR’s, deposits, debt instrument and government securities. The bank has been following a strategy of focusing on mortgage finance in which, given the market condition, asset deployment has witnessed slower rate. The bank has entered into micro lending wherein which the size is evolving though small at the moment. Going forward targets are aligned to the size of the bank. During 1HFY20 the bank significantly reduced its operational loss from the same period of last year. The management has represented that the bank has already ventured into cash profit. The distance to accounting loss has also been narrowed. Going forward, it is expected that soon the bank will be reporting profits. The bank is funding its needs through equity at the moment. CODs base is limited with small amounts mobilized from the corporate segment. No aggressive deposit mobilization drive is planned. Branch network for micro lending is being expanded and it is expected that with addition of 2 branches, the network will reach consolidation point for some time. This will support the revenue generation.
The ratings are dependent on the continuous financial strength and maintained liquidity position. Immaculate financial discipline and corporate governance is important. Any discrepancy in achieving its targets remains critical to the ratings.

About the Entity
Escorts Investment Bank Limited (EIBL), a Non-Banking Finance Company (NBFC), started its commercial operations in 1996. Major shareholding is held by Bahria Town (Pvt.) Limited and its associates (~89%) while the rest is owned by the public sector companies and general public. Bahria Town is a privately owned real-estate development company which owns, develops, and manages properties across Pakistan. It is the leading private real estate company in the country. The major ownership of BTPL is held by Chairman & CEO Mr. Malik Riaz Hussain.
EIBL’s board (BoD) comprises seven members including the CEO. The board included two independent directors. All other members are non-executive members except the CEO. Ms. Zainab Malik is the Chairperson of the board, the only representation of the sponsoring family. She carries experience of corporate governance during her period of directorship for last 7 years over different companies. The CEO, Mr. Naveed Amin, possess an experience of 29 years including financial sector work 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.