The Pakistan Credit Rating Agency Limited
Press Release


Ayesha Qasim

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PACRA Maintains Entity Ratings of Escorts Investment Bank Limited

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

The ratings reflect the financial strength of bank's sponsor, Bahria Town (Pvt.) Ltd: The sponsors have injected sizable equity into the bank which is currently marked as subordinate loan. They have enabled the bank to settle off the bulk of liabilities to the deposit holders. The management team is in place. The bank faced a slowdown in mortgage loans due to uncertainty pertaining to its prime identified market: Bahria Town. In the wake of recent court judgement, the bank is refreshing the financial projections. Management expects the business to pick up. The subordinate loan from the sponsor would be converted into equity via right issue. Escort Investment was waiting for regulatory approvals; the bank now expects to have the approval in place. This will provide further additional liquidity. Synergistic support from Bahria Town is expected to play pivotal role in the business growth of the bank. Market for mortgage firm is huge, indeed there is sufficient room to expand in Bahria Town schemes. The sponsors have a rich experience of the real estate market. Going forward, revival of business operations and achieving break-even will be the management focus. The bank has reported nominal profit in the quarter ended 31 Dec, 2018.
The ratings are dependent on the continuous sponsor support and achievement of breakeven by the EIBL new management. 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. After the acquisition of EIBL in Jan-18, the major shareholding is held by Bahria Town (Pvt.) Limited (76.3%) 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.
The old Board resigned in Jan-18 on the day of EIBL acquisition by BTPL. EIBL’s new board (BoD) comprises seven members including the CEO. The board included two independent directors. All other members are non-executive members except the CEO. Mr. Zain Malik is the Chairman of the new board, the only representation of the sponsoring family. He carries rich experience of the real estate business, financial services and brokerage. The CEO, Mr. Naveed Amin, possess an experience of 27 years especially in the Non-Banking Financial Institutions (NBFIs).

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.