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The Pakistan Credit Rating Agency Limited
Press Release

Date
26-Jun-20

Analyst
Raniya Tanawar
raniya.tanawar@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of Bank Alfalah Limited

Rating Type Entity
Current
(26-Jun-20 )
Previous
(28-Dec-19 )
Action Maintain Maintain
Long Term AA+ AA+
Short Term A1+ A1+
Outlook Stable Stable
Rating Watch - -

The ratings reflect the bank's sustained performance, good asset quality, strong financial profile and healthy liquidity. The bank has maintained its position as one of the large banks, in terms of market share. The bank's advances has been maintained at a notable level, resulting in a distinguished ADR of ~65.4%, which is the highest among the universe of large banks. The mix of deposits improved as the bank added a few percentage points to the CA portion in the CASA mix. In line with the industry, BAFL's cost of funds also gained some momentum during 2019. Being customer centric Bank with focus towards technological advancement, BAFL has a sound foothold with a considerable presence across the country - enabling its deposit base growth. The Bank has sustained good profit base while in-hand countering the macroeconomic imbalances. As CPI index doubled during 2019 on YoY basis Bank's operating cost took a toll, which is in line with the industry. Overall infection ratio remained at the lower edge yet stable. Effective implementation of the envisaged long term business strategy has played an important role in business growth. The rating draws comfort from the bank's stable ownership, experienced management team, prudent risk management policies and distinct emphasis on sustaining the position. From the start of current year 2020, Covid-19 has posed challenges to the banking sector, almost all segments of the economy, worldwide and domestically, are getting negatively impacted. The ramifications would continue to unfold, warranting vigilance and timely actions where needed. The bank has also formed a board level Corona Crisis Management Committee in order to formulate future strategies for diminishing the financial and business risks.
The rating is dependent on the bank's sustained risk profile. The equity base of the bank and CAR are satisfactory and expected to remain the same in view of the uncertainties prevailing due to COVID-19. Augmentation of the Bank's capitalization backed by strong sponsors and adding granularity to its advances and deposits book are essential. Continued effective management of spreads remains important, meanwhile, holding the asset quality is a pre-requisite.

About the Entity
Bank Alfalah Limited (BAFL) has a network of 698 branches, at end-Dec19, across more than 200 cities in the country. Main sponsor Abu Dhabi Group (ADG), comprises some of the prominent members of UAE's ruling family and leading businessmen of UAE, continues to own majority stake (~49.03% at end-Dec19) in the bank.
At present, BAFL's BoD comprises eight members including President & CEO and seven Non-Executive Directors, of which four of whom are representatives of ADG, one represents IFC, while two are independent. Mr. Atif Bajwa has recently joined the Bank’s board as the President & CEO of the bank. He carries extensive international career experience spanning 37 years of executive leadership roles in banking.

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.