The Pakistan Credit Rating Agency (PACRA) has upgraded the long-term and short-term entity ratings of The Bank of Khyber (BoK) to "A" (Single A) [previous: A-]and "A1" (A One) [previous: A2] respectively. These ratings denote a low expectation of credit risk emanating from strong capacity for timely payment of financial commitments. The ratings reflect BoK's improved relative positioning amongst peers emanating from better performance, sound liquidity, and supporting capital structure.
The management, while following a well-conceived strategy, has gradually expanded the bank's outreach, deposits, and credit book. The ratings incorporate BoK's ability to arrest infection in its lending portfolio as reflected in its controlled asset quality. However, given tough economic fundamentals, a careful monitoring of related risks would require active attention. The bank is eyeing branch expansion with focus on low cost deposit mobilisation, while approaching toward credit expansion stays cautious.
The ratings continue to draw comfort from the association of the bank with Government of Khyber Pakhtunkhwa, wherein the management plans inroads into financial services needs of the government.
The ratings are dependent on bank's ability to hold its overall risk profile, while expanding its size. Improvement in the technology platform is critical to foster the control environment including reporting framework.-PR
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