The Pakistan Credit Rating Agency Limited
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Sehar Fatima

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PACRA Maintains Entity Ratings of The Bank of Punjab

Rating Type Entity
(28-Jun-19 )
(27-Dec-18 )
Action Maintain Maintain
Long Term AA AA
Short Term A1+ A1+
Outlook Stable Stable
Rating Watch - -

The ratings reflect improved risk profile of Bank of Punjab (BoP) with an appreciable enhancement in profitability and asset quality over the last few years which supplemented the equity base. The year 2018 is particularly reflective of this, after the loss booked in 2017. During CY18, the bank has recorded commendable uptick in revenue base – both interest earned and income from fee, commission. Hence, a rise was witnessed in asset yield. The Bank also booked reversal in NPLs. During CY18, the bank recorded sizable improvement in profitability which was further supplemented by reversal in provisioning. The bank's Capital Adequacy Ratio (CAR) clocked in at 13.17% for the period ending-Dec18, which is a healthy sign for BoP. Going forward, the bank envisages growth in advances wherein the criteria is higher margins with sustained risk profile. Meanwhile, expansion in deposit base with low cost focus, while attracting a wide customer range, is on the cards.
The ratings are dependent on the financial risk profile of the bank, mainly emanating from sustenance of capital adequacy and continued healthy profitability trend in line with the management's plans. Meanwhile, improvement in asset quality and upholding better governance standards remain imperative.

About the Entity
The Bank of Punjab, established under the BOP Act 1989, is listed on Pakistan Stock Exchange (PSX). The bank operates a vast network of 576 branches as at end Dec-18, mainly concentrated in Punjab. The Government of Punjab (GoPb) holds majority stake in BOP (58%), whereas the rest is widely dispersed.
During CY19, Mr. Talib Rizvi has been appointed as President and CEO of The Bank of Punjab, although the approval is pending with SBP. Mr. Khalid Tirmizey, former deputy CEO, has become Acting-CEO in Dec-18. The senior management consists of seasoned bankers. The current team has played a pivotal role in the bank's revival; their continuity and cohesiveness is critical for successful execution of the envisaged business plan.

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.