The Pakistan Credit Rating Agency (Pacra) has assigned a rating of 'AA' (double A minus) to the proposed unsecured, subordinated term finance certificates issue of Rs 1,500 million by Bank Alfalah Limited.
The rating denotes a very low expectation of credit risk emanating from a very strong capacity for timely payment of financial commitments.
The rating reflects the bank's well-conceived business strategy supported by an effective risk management system, helping the bank to maintain good asset quality despite its high growth mode in recent years.
The Bank Alfalah's strategy encompasses continuing growth in business volumes through providing a wider spectrum of innovative financial products and solutions to an expanding client base. However, this growth is without compromising on the quality of the credit portfolio for which a well-designed, transparent risk management system is in place.
The Bank Alfalah, since its privatisation in 1997, is almost owned by the Abu Dhabi Group. Pursuant to successful offer for sale of 20 percent shares by some of shareholders, the bank has been listed on the Karachi Stock Exchange in 2004.
The Bank Alfalah's business is governed by a low-margin high-volume philosophy. In recent years, the bank has shown aggressive growth in all areas of business, including deposit mobilisation, credit expansion and geographical outreach. It is the fifth largest bank in the country in terms of total assets with a network of 115 branches, including 15 Islamic branches at end-June 05.
The proposed unsecured subordinated TFCs would have a tenor of eight years carrying mark-up at a floating rate of latest six-months KIBOR plus 1.5 percent. Major principal redemption would be in three equal semi-annual instalments commencing from the 84th month of the issue.
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