The Pakistan Credit Rating Agency Limited
Press Release


Muhammad Fahad Iqbal

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PACRA Assign Preliminary Rating to JS Bank Limited | PPTFC | Tier II | TBI

Rating Type Debt Instrument
Action Preliminary
Long Term A+
Short Term -
Outlook Stable
Rating Watch -

The ratings reflect the relative position of JS Bank in the country's competitive banking landscape. This stems from largely intact customer deposit system share (end-Dec20: 2.4%, End-Dec19: 2.3%). The Bank has assembled a highly experienced and qualified top management team to head various departments. Advances were largely maintained in end-Sep21 compared with end-Dec20. NPLs have risen from PKR 11.7bln in Dec20 to PKR 14.6bln in Sep21. Though the overall infection ratio of the Bank remains below the industry average. The total deposits of the Bank stand at PKR 439bln as at end Sep21 where current deposits witnessed an increase. The total CAR stood at 13.1% (Tier-I at 10.5% as of Sep21). Although gross mark-up income has come down significantly because of the reduced interest rate environment, the net mark-up income has gone up which shows efficient ALM management and way forward will increase Bank’s profitability due to rise in interest rates, enabling the Bank to book net income closer to the annual net income level the previous year. The Bank has achieved internal reorganization; this has been done to focus the targeted areas of growth while meeting the associated challenges. Further strengthening in risk framework is being ensured through segregation of credit and risk function into sub-categories based on functions and geography. The Bank expects the profits to be boosted from growing direct and ancillary business.
Ratings are dependent on JS Bank's ability to sustain its profitability to support the internal generation of capital. Meanwhile, upholding asset quality, maintaining system share in terms of advances and deposits, adding diversity to an income stream, sound CAR, and strong governance framework is critical.

About the Entity
JS Bank Limited (JSBL), incorporated in March 2006, commenced its banking operations on December 30, 2006. JSBL is a subsidiary (75%) of Jahangir Siddiqui & Co. Limited (JSCL), whereas the rest is widely spread. The overall control of the bank vests in the Board of Directors (BoD) including the CEO. Mr. Basir Shamsie has been re-appointed as President & CEO of JS Bank for a period of three years commencing from July 16, 2021.

About the Instrument
JS Bank intends to issue Tier II capital TFC. The instrument will be of PKR 2,500mln (inclusive of a Green Shoe option of PKR 500mln). The Issue Amount (to be raised after obtaining necessary corporate & regulatory approval(s)) will contribute towards JSBL’s Tier 2 Capital for complying with the Capital Adequacy Ratio (“CAR”) requirement prescribed by SBP under its Circular. The tenor of the instrument is up to 7 years. The profit rate is Base Rate + Margin of 2.00% p.a. The instrument will be structured to redeem 0.24% of the Issue Amount during the 06 years after the Issue Date and remaining Issue Amount of 99.76% in 02 equal semi-annual installments of 49.88% each in the last year. JSBL may call the TFCs at par (either partially or in full), with prior approval of SBP, on any profit payment date on or after 05 years from the Issue Date, subject to not less than 30 calendar days prior notice being given to the investors. The Call Option once announced will not be revocable.

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.