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Pakistan's banking sector has shown significant growth in recent years and continues to offer attractive returns to investors in this sector. The extraordinary growth in the banking sector is the result of conducive regulatory environment and investor friendly policies followed by the government of Pakistan.
Rapidly growing local industries in search of banking credit, and soaring foreign direct investment in relatively under-valued sectors. In the last nine months alone over USD5.5 billion has come into Pakistan in the form of foreign investment and this number is expected to grow next year.
As a result of Pakistan's improving economic fundamentals and investment climate, Samba Financial Group (SAMBA), a leading financial institution from Saudi Arabia, invested PKR 6 billion (PKR six billion) into Crescent Commercial Bank Ltd (CresBank) in March 2007. Subsequent to this investment, SAMBA now owns a 68% controlling majority in CresBank.
In return, CresBank's paid-up capital has increased to PKR 8.8 billion, making it one of the highest capitalised banks in Pakistan. CresBank's board has also been re-constituted accordingly to reflect SAMBA's majority ownership in accordance with the requirements of Pakistani and Saudi Arabian regulatory authorities.
Following SAMBA's capital injection, JCR-VIS Credit Rating Co, Ltd has upgraded the medium to long-term rating of CresBank by three (3) notches to 'A' (Single A) from 'BBB' (Triple B) and its short-term rating to 'A-1' (A-One) from 'A-2' (A-Two). A 'Positive' outlook has been assigned with the rating, which is indicative of a possible upgrade in the near term. The outlook relates to the expectation of further team building, sharing of technology and resources with SAMBA, and the full scope rollout of the bank's business strategy. Acknowledging the bank's rapidly improving credit quality and financial strength reflected by the revised ratings from JCR-VIS, CresBank's CEO Shehzad Naqvi said, "The bank is in a state of rapid transformation driven by SAMBA's enormous financial strength and brand recognition, a newly elected and highly experienced Board of Directors, enhanced credit ratings, and a very capable management team. All of these are essential ingredients for a bank with ambitions to become a vibrant, versatile, and innovative financial powerhouse with a diverse product offering for it's customers across the country".
CresBank intends to expand countrywide to cover major customer concentrations with better banking product offering. With a considerable increase in resources now available to the bank, earnings are expected to improve significantly in the ensuing quarters. The bank's deposit growth has also picked momentum since its take over by SAMBA. The bank has received the appropriate regulatory approvals to rapidly expand its branch network throughout the country by the end of this year.
Commenting on this, Shehzad said, "The bank will provide a full spectrum of value-added services to its growing customer base ranging from improved consumer banking services, more efficient cash management capability, and broader customer access via a rapidly expanding network and ATM facilities.
The management's aim is to guide the bank towards long-term sustainable growth and to deliver superior returns to all its stakeholders, which should benefit the institution and the country as a whole. CresBank will benefit immensely from the balance sheet strength and strong platform that SAMBA provides".
SAMBA is the second largest bank in the Middle East with a market capitalisation of US $22 billion and shareholder's equity of US $3.9 billion. It enjoys the highest credit ratings by S&P, Fitch, and by Capital Intelligence. Furthermore, SAMBA has been granted several international accolades from international prominent bodies specialised in financial industry including the award of "Best Middle East Bank in 2006" by Emerging Markets.
CresBank is a scheduled commercial bank formed in 2003. It is listed on all three stock exchanges of the country with a network of eighteen branches in Karachi, Lahore, Islamabad and one each in Peshawar, Sialkot and Faisalabad.

Copyright Business Recorder, 2007

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