Lahore, June 17, 2016 (PPI-OT):The Pakistan Credit Rating Agency Limited (PACRA) has maintained the long-term and short-term entity ratings of Soneri Bank Limited (SBL) at “AA-” (Double A minus) and “A1+” (Single A one plus) respectively. These ratings denote a very strong capacity of timely payment of financial commitments. The rating of unsecured, subordinated, and listed TFCs of PKR 3,000mln has also been maintained at “A+” (Single A plus). This rating denotes a low expectation of credit risk.
The ratings reflect Soneri Bank’s sustained business profile; deposit system share maintained. The bank’s earning assets registered a growth – mainly in government securities – funded by money market borrowings and deposits. ADR rationalized, yet remained healthy versus industry average. With sizeable government securities exposure, capital gains augmented the bottom-line. Thus the bank’s profitability maintained its upward trajectory; however, spreads came down – an industry wide phenomenon. Going forward, the bank, while focusing to improve asset quality, intends to follow a conservative strategy in terms of advances growth.
Enhancing non-fund based exposure, in turn fee income, would be focused while capitalizing on potential business opportunities expected from China-Pakistan Economic Corridor. At the same time, the strategy would be to mobilize low-cost deposits; branch target 300 by end-Dec16. The bank maintained sound liquidity and good risk absorption capacity. However, dividend pay-out declined the capital adequacy ratio (15% at end-Dec15) at end-Mar16; this needs effective monitoring going forward.
The rating is dependent on the bank’s ability to maintain its market position in banking industry while strengthening its overall risk profile. Bringing efficiency in operational structure is important to rationalize costs. In comparative landscape, adding granularity to core operations is critical. Meanwhile, increase in system share would be ratings positive.
For more information, contact:
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425