Askari Commercial Bank rating maintained

The Pakistan Credit Rating Agency (PACRA) has maintained the long-term and short-term entity ratings of Askari Commercial Bank Limited (ACBL) at "AA+" (Double A Plus) and "A1+" (A One Plus) respectively. The ratings of the first and the second unsecured, subordinated TFC issues of PKR 1,500mln each have also been maintained at "AA" (Double A).
The ratings denote a very low expectation of credit risk emanating from a very strong capacity for timely payment of financial commitments.
The ratings reflect the bank's largely sustained core performance and very good asset quality, which despite experiencing certain deterioration lately was preserved owing to sizeable general provision for potential loan losses. The bank, while maintaining its cautious stance towards entering new avenues, intends to strengthen its position within the retail-banking segment - low cost deposit mobilisation and high margin consumer financing - to improve its competitiveness. The ratings also recognise the management's efforts of continuously strengthening the risk management systems.
ACBL, operating with a countrywide network of 98 branches plus one offshore banking unit (end-05), commenced its operations in 1992 and has emerged as one of the major players in the commercial banking sector of the country. Army Welfare Trust (AWT) remains its principal shareholder controlling the Board of Directors, through its nominees. AWT has business interests spread across a wide range of economic and industrial sectors. ACBL offers a full range of commercial banking services to the corporate, middle market and retail segments.
The new president, subsequent to the completion of term of the previous one, assumed the office on March 06. However, except this change, the senior management - comprising experienced and distinguished bankers - has remained the same. While the new president has extensive banking experience - including two years in ACBL - he faces a daunting task of preserving the bank's relative positioning in the fast changing sector dynamics.
About the issues: ACBL has issued unsecured subordinated TFCs of PKR 1,500mln each for a tenor of eight years in February 2005 and October 2005. The profit payment is made semi-annually, based on 6-month KIBOR plus 150bps. The principal will be redeemed in a bullet payment at the maturity of the instrument.