The Pakistan Credit Rating Agency Limited
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Saliha Sajid

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PACRA Maintains Entity Ratings of MCB Islamic Bank Limited

Rating Type Entity
(27-Jun-19 )
(26-Dec-18 )
Action Maintain Maintain
Long Term A A
Short Term A1 A1
Outlook Stable Positive
Rating Watch - -

MIB is a wholly owned subsidiary of MCB Bank Limited (MCB). MCB has long term rating of "AAA" reflecting its robust profile duly supplemented by its strong market position in local banking landscape, established brand equity, and sound financial profile. MIB’s standalone risk profile is improving. The management’s strategy is to focus primarily on high-rated, blue chip corporate clients. Meanwhile, undertaking new business lines including Micro, SME and Consumer financing are also on the horizon. MIB has set relatively high targets for deposit growth and plans to focus on maintaining its financing book quality. Technological implementation and setting governance structure were mile stones achieved by bank in the last year. The thrust of the business plan is to achieve break-even. The bank added branches from parent company resulting in bank's expanded outreach. Increase in advances book added from parent company; asset quality remained intact. Dilution in bank's ADR may provide room for future growth. CASA remained largely same but cost structure of the bank is considered to be under stress. Going forward, monitoring of CAR while expanding lending portfolio and achieving sustainable profitability is essential.
The ratings are dependent on bank's ability to hold its risk profile, while maintaining its relative market position in the banking industry.

About the Entity
MIB was formed as a banking company in May, 2014. MIB is a wholly owned subsidiary of MCB - one of Nishat Group's major concern - having strong presence in the financial sector. It started its commercial operations in November, 2015. Initially, it had six branches, however, currently working at 176 branches. MCB Islamic bank’s deposits are 0.5% of total banking industry.

The overall control of the bank vests with eight members of the Board of Directors (BoD), including CEO. Board consist of two independent directors and five non-executive members. Mr. Raza Mansha is the Chairman of the Board. He is accompanied with ~2 decades of diversified experience in various business sectors including Banking, Textile, Power, Cement, Insurance, Hotels, Properties, Natural Gas, Agriculture, Dairy etc. Majority of the Board members possess extensive national and international banking and financial services industry experience. He is supported by an experienced team.

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.