JCR-VIS Credit Rating Company Limited has upgraded the entity ratings of Habib Bank Limited (HBL) to 'AAA/A-1+' (Triple A/A-One Plus) from 'AA+/A-1+' (Double A Plus/A-One Plus). Outlook on the ratings is 'Stable'. HBL has been continuing to demonstrate sustained growth in a challenging economic environment.
HBL's dominant position in the banking sector is underpinned by its strong access to granular and low-cost deposits, as evidenced by its highest market share in retail and current deposits. The bank operates through the largest domestic branch network with plans to further expand it in consonance with emerging demographics.
More recently, the deposit base of HBL has crossed Rs 1 trillion. Healthy growth in profits has allowed the bank to absorb the impact of rising NPLs. While spreads of the Bank are expected to witness pressure in the ongoing year, in line with the entire banking sector, owing to recent changes in benchmark rates; anticipated growth in balance sheet may mitigate the impact of narrowing margins on profitability to some extent.
Ratings also derive strength from the robust liquidity profile of the Bank. Moreover, given the significant deployment in low-risk assets and sound pace of internal capital generation, capitalisation levels of the Bank have strengthened over time and depict resilience.-PR
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