PACRA Maintains Entity Ratings of Standard Chartered Bank (Pakistan) Limited

The ratings reflect the Standard Chartered Bank (Pakistan) Limited “SCBPL” 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. Bank’s market share in customer deposits has inched up by 3.2% as of end-Dec22 (end-Dec21: 3.0%). SCBPL's predominantly low-cost deposit base has enabled the bank to achieve one of the best CASA mix in the industry (CY22: 95.5%, CY21: 92.1%) while distinguishing it from its peer universe it also facilitates core operating activities. The ratings incorporate the Bank's dominant position in its targeted 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 strategy is to focus on retail business and digitization along with traditional banking. The Bank is focused on enhancing yield, cost efficiency, increasing client revenue, and growing customer assets. The bank’s net mark-up income recorded double-digit growth, during CY22 and 1QCY23, owing to a record rise in key policy rates during the year. The trend is expected to sustain, given the high-interest rate environment prevailing at the moment. The advances of the Bank witnessed a decline in CY22 and ADR clocked at 30% (CY21: 37.4%). The rating factor is sound management quality, efficient spreads, efficient operating structure, and ample liquidity of the Bank. The risk absorption capacity of the Bank, measured in terms of CAR, is robust (18.7%). The banking sector continued to flourish with high profitability. Going forward, the macroeconomic environment is beset with myriad challenges due to heightened interest rates, tightening of demand, rupee depreciation, and higher infection. This has repercussions for the entire system including banking.
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 40 branches including 2 Islamic branches across 10 cities at end-Mar’23. In recent years, Bank has extensively focused on digitizing its services and the emphasis on digitization is expected to continue in the future. Standard Chartered (PLC) credit ratings as of 6th July 2022 were A+ with a stable outlook (Fitch), A+ with a stable outlook (S&P) as of 25th July 2022, and A3 with a stable outlook (Moody’s), and as of 14th November 2022. SCBPL's six-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. Rehan Shaikh, the CEO of the bank, is a seasoned banker, who is assisted by an experienced team.