JCR-VIS Credit Rating Company Limited has reaffirmed the medium to long-term and short-term entity ratings of Picic Commercial Bank Limited at 'A+' (Single A Plus) and 'A-1' (A-One), respectively.
These ratings continue to be on 'Rating Watch - Positive' status due to the implications of the acquisition of majority shares of the parent company, ie Pakistan Industrial Credit and Investment Corporation (Picic) by NIB Bank Ltd (NIB).
Subsequent to the above-mentioned acquisition, a new board of directors has been nominated for the bank with effect from June 28, in order to reflect the new shareholding pattern of Picic. The State Bank of Pakistan has also permitted the appointment of the incumbent chief executive officer of NIB as common chief executive officer for all three institutions until their merger into one entity.
Meanwhile, the bank's growth momentum started tapering off during FY2006 due to discussions surrounding the acquisition of Picic and its impact on PCBL. There was also an increase in the non-performing loan portfolio of the bank, resulting in higher provisioning.
Markup spreads were also affected by increased competition in deposit mobilisation. The key challenge for the new management will be to utilise the branch network and enhance franchise value to generate a relatively cost effective deposit mix.-PR
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