PACRA Maintains the Ratings of Soneri Bank Limited | Tier 2 Capital TFC | PKR 4bln | Dec'22

The ratings reflect the astute leadership of Soneri Bank ("SNBL" or the "Bank"), which has played a pivotal role in building and sustaining a strong business profile over the years. The Bank has achieved sizeable growth in its low-cost deposit base and continues to work on optimizing deposit composition and enhancing cost efficiency. In addition, it is experiencing notable growth in trade business volumes and is actively expanding its footprint through a growing branch network. The Bank is also taking strategic initiatives to strengthen its digital presence, aiming to improve customer experience and operational efficiency while staying aligned with evolving industry trends. The Bank expanded its branch network significantly in CY24, adding 101 new branches to reach a total of 544 (up from 443 in CY23). This milestone of 500+ branches reflects the Bank’s strategic growth and strong focus on customer satisfaction. Notably, the newly established branches contributed 46% to the total deposit growth from CY23 to CY24. Additionally, in CY24, the Bank recorded a remarkable growth of 119% in its overall customer base. Over the same period, SNBL’s deposits observed growth of ~5%, where CASA was inclined to 82% (CY23: 79%). With a greater contribution of 52% (CY23: 49%) from the SA and CA, stood the same as last year at 30%. The Bank’s advances grew by 18.2%, increasing the ADR to 44.8% (CY23: 39.7%). Asset quality improved, with the NPL coverage ratio rising to 90% (CY23: 80%) and the infection ratio dropping to 3.1% (CY23: 4.9%), reflecting strong recovery efforts. In CY24, net-markup income rose by 9.6% to PKR 24.9bln (CY23: PKR 22.8bln), while non-markup income increased by 4.6% to PKR 6.8bln (CY23: PKR 6.5bln), driven by fee and commission income of PKR 4.3bln (CY23: PKR 3.1bln), with 40% from trade-related services. However, net profit declined by 2.86% to PKR 5.9bln (CY23: PKR 6.1bln), mainly due to a 26.2% rise in non-markup expenses to PKR 19.5bln (CY23: PKR 15.5bln), driven by elevated inflation, particularly in 1QCY24 and nationwide branch expansion. The equity base grew to PKR 30.8bln (CY23: PKR 28.6bln), while the CAR stood at 17.7% (CY23: 18.4%). The Bank plans to enhance its deposit base and customer relationships through digital innovation and customized solutions. Continued growth in core and trade-related income, along with a focus on non-fund-based exposures and operational efficiency, will drive long-term sustainability.
The sustained growth in the deposit share, while keeping the low cost deposit base and improvement in the risk absorption capacity would be important.

About the Entity
SNBL was established in 1991. The Bank’s primary sponsors are the Feerasta Family, who collectively own a majority share in SNBL. The overall control of the Bank vests with an eight-member Board. Mr. Amin A. Feerasta acts as Chairperson of the Board.

About the Instrument
SNBL issued unsecured, DSLR listed, subordinated and rated TFCs ("TFCs" or the "Instrument") in Dec-22 of PKR 4bln to contribute towards Bank's Tier II Capital. The funds raised were utilized in the Bank's normal business operations. The TFCs carry a profit rate of 6MK + 1.70%, paid semiannually in arrears, with a 10-year tenure and a callable option after five years, subject to SBP approval. A lock-in clause restricts payments if regulatory capital thresholds (MCR, CAR, LR) are breached. The TFCs include a loss-absorption clause, allowing SBP to convert them into common shares in the event of non-viability. It is subordinated to other Bank debts, but ranks equally with Tier II TFCs and higher than Additional Tier I TFCs and common shares. The principal will be redeemed gradually: 0.36% over the first 9 years and 99.64% in two semi-annual installments in the final year. The Bank made a coupon payment of 277.4mln in June 2025.