Analyst
Sohail Ahmed Qureshi
sohail.ahmed@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
PACRA Maintains Entity Ratings of Standard Chartered Bank (Pakistan) Limited
Rating Type | Entity | |
Current (25-Jun-20 ) |
Previous (25-Dec-19 ) |
|
Action | Maintain | Maintain |
Long Term | AAA | AAA |
Short Term | A1+ | A1+ |
Outlook | Stable | Stable |
Rating Watch | - | - |
The ratings reflect SCBPL's association with a financially sound and reputed international bank - Standard Chartered PLC. This is supplemented by SCBPL's strategic and operational integration into the parent as the bank continues to benefit from the technical resources and cumulative expertise developed at the group level. The ratings incorporate the bank's dominant position in its target niche market (MNCs, established domestic Corporates & affluent retail clients) through a comprehensive product suite and significant digital capabilities complemented by its international franchise and its extensive presence in tier-I cities. The bank has depicted stronger profitability in CY19. The bank is increasing its focus on deployment of advances to boost profitability, as reflected by its enhanced ADR ~46.8% in CY19 (CY18: 39.9%), which has narrowed the gap to industry average (51.5%). The ratings factor in sound management quality, healthy spreads, efficient operating structure and ample liquidity of the bank. SCBPL's pre-dominantly low-cost deposit base has enabled the bank to achieve one of the best CASA mix in the industry, while distinguishing it in its peer universe it also facilitates core operating activities. The bank is focused towards enhancing yield, cost efficiency, increasing client revenue and growing retail asset base. The risk absorption capacity of the bank, measured in terms of CAR, is robust (16.94%). Covid-19 has posed challenges to the banking sector, as 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 ratings remain dependent on the bank's ability to maintain its presence in profitable segments, while remaining abreast of changing domestic operating environment. Meanwhile, maintaining spreads whilst not compromising on the asset quality is important for the bank.
About
the Entity
SCBPL, incorporated in Pakistan in Jul 2006, is ultimately owned (98.99%) by Standard Chartered PLC and operates with a network of 61 branches across 11 cities at end-Dec19. In the recent years, Bank has extensively focused on digitizing its services and the emphasis on digitization is expected to continue in future. Standard Chartered PLC is rated (S&P: BBB+) with stable outlook as at August 7, 2019, (Fitch: A) with negative outlook at April 17, 2020 and (Moody's: A2) with stable outlook as at May 29, 2020.
SCBPL's seven-member BoD comprises qualified and experienced professionals. The board has four members of the Standard Chartered (SC) Group, including SCBPL's CEO. The remaining members of the board are independent or non executive directors. Mr. Shazad Dada, the CEO of the bank, is a seasoned Banker, he is assisted by an experienced team.