PACRA Maintains the Rating of Bank AL Habib Limited | Tier-II | TFC X | PKR 7bln | Dec'22

The ratings of Bank AL Habib Limited reflect its enduring and sustained emphasis on reinvigorating its relative positioning in the peer universe. While the competitive landscape is becoming increasingly intensified, the Bank, under its able leadership, is actively taking measurable steps to remain competitive and, indeed, improve its positioning. As of 9MCY24, the Bank's deposit base grew by 15%, reaching PKR 2,222bln (CY'23: PKR 1,934bln). The major influx has been experienced in the customer deposits grew by ~17% during 9MCY24. The overall deposit mix in terms of CASA ratio has also been improved to ~75% as of the end Sep'24 (Dec'23: 71%). The gross advances stood at PKR 814bln (CY'23: PKR 896bln). Subsequently, the advance share of the Bank clocked at 7.0% (CY'23: 7.2%). The non-performing loans of the Bank reported an increase of 38% to PKR ~35bln (Dec'23: 25.2, Dec'22: 15bln). The resulting infection ratio recorded an uptick to 4.29% as of ended Sep'24 (Dec'23: 2.8%). During 9MCY24, the investments increased to PKR 1.81trln (Dec'23: PKR 1.5trln). The resultant ADR declined to ~37% as of the end of Sep'24 (Dec'23: 46%). During 9MCY24, the Bank reported a Profit After Tax of PKR 33bln (9MCY23: 29.2bln, CY'23: PKR 35bln), while Net Interest Margin Revenue (NIMR) was PKR 116.5bln (9MCY23: 84.8bln, CY'23: PKR 124bln). Markup income from the expanded investment portfolio and a 33% increase in other income (branch banking, commission on trade and card related fees) were key drivers of profitability during 9MCY24. The CAR of the Bank reflected an improvement to 19.63% (CY'23: 15.8%) owing to healthy profitability.
The rating is dependent on the Bank's sustained risk profile. The equity base of the Bank and CAR is satisfactory and may continually be enhanced.

About the Entity
BAHL, incorporated in Oct 1991, operates with a network of 1,190 branches/sub-branches, including 256 Islamic Banking branches as on Sep-24. The sponsors of BAHL are members of the Habib Family – one of the oldest and most distinguished names in Pakistan’s banking sector. BAHL’s nine-member BoD includes representatives of the Habib Family and independent members. Mr. Mansoor Ali Khan, the Bank’s CEO, has been associated with the Bank for more than 28 years. He is backed by a team of experienced professionals, most of whom have a long association with the Bank.

About the Instrument
The Bank issued unsecured, rated, listed and subordinated, up to ten years tenured TFCs with an issue size of PKR 7bln. The instrument bears a call option, exercisable (either partially or in full) on or after five years of the issue date. Neither profit nor principal will be payable if such payment results in a shortfall in the Bank’s Minimum Capital Requirement (MCR) or Capital Adequacy Ratio (CAR) or Leverage Ratio (LR). The Issue contributes toward the Bank’s Tier II Capital for CAR requirements and bears a floating rate of 6MK+1.35% p.a. The instrument redeems 0.02% of the issue amount semi-annually during first 9 years and the remaining amount in two equal semi-annual installments in the 10th year. The instrument is subordinated as to payment of principal and profit to all other indebtedness of the Bank but superior to outstanding Additional Tier 1 issues and ordinary shares.