PACRA Maintains the Rating of Bank AL Habib Limited | Tier II TFC VIII | Sep-21

The ratings of Bank AL Habib Limited (BAHL) reflect the Bank’s continued emphasis on sustaining and reinforcing its relative positioning in an increasingly competitive banking landscape. Under strong and consistent leadership, the Bank is executing targeted strategic initiatives to maintain its competitiveness and expand its market presence. BAHL has built a long-standing track record of steady growth, anchored in sound governance, prudent risk management, and a strong customer-centric approach. A distinctive feature of the Bank’s strategy is its unwavering focus on nurturing customer relationships—this remains a key driver of both loyalty and growth. Core strengths in trade finance and foreign remittances continue to contribute meaningfully to revenue diversification and industry positioning. In CY24, foreign trade volumes remained on the higher side, while the Bank’s renewed focus on remittances has borne fruit, improved its market share and allowed it to maintain a net positive contribution in forex terms. The Bank’s deposit base grew to PKR 2.28 trillion (from PKR 1.93 trillion), pushing its market share to 7.31%, with a CASA ratio improvement to 88.45%. Advances rose to PKR 910.9 billion. However, after a period of stability, there was an uptick in non-performing loans primarily tied to a few large, concentrated exposures. These are adequately provided for, and management remains optimistic about recoveries. Despite elevated provisioning, profit after tax increased to PKR 39.9 billion (from PKR 35.3 billion). BAHL is also expanding its acquiring business and deepening its reach across the broader financial services spectrum to meet evolving customer expectations. Looking ahead, while sector-wide margin compression is likely amid monetary easing, BAHL’s strategic clarity, experienced leadership, and deep-rooted customer relationships position it well to sustain growth and maintain its standing as a stable and trusted institution in Pakistan’s banking sector.
The ratings are dependent on the sustained market positioning of the Bank in all areas of its business leadership, while preserving the asset quality. A strong capital adequacy remains essential.

About the Entity
BAHL, incorporated in Oct 1991, operates with a network of 1,221 branches/sub-branches, including 276 Islamic Banking branches at end-Dec24. 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 Ten-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 almost three decades. He is supported by a team of experienced professionals, most of whom have a long association with the Bank.

About the Instrument
BAHL issued a rated, unlisted, unsecured and subordinated TFC VIII in Sep-21 of PKR 5bln to contribute towards the AL Habib's Tier II Capital. The instrument is unsecured and subordinated as to payment of principal and profit to other indebtedness of the Bank, including deposits, but will rank pari passu with other Tier II instruments and superior to Additional Tier I instruments and common shares. The tenor of the instrument is 10 years and callable on or after five years with prior approval of SBP. The profit rate is 6M-KIBOR plus 75bps and is being paid semi-annually in arrears on the outstanding principal.