The Pakistan Credit Rating Agency (Pacra) has assigned a long-term rating of 'BBB+' (Triple B Plus) and short-term rating of 'A2' (A Two) to KASB Bank Ltd.
The ratings have been assigned a positive outlook. These ratings are applicable to the senior unsecured creditors (depositors) of the bank and denote low expectation of credit risk emanating from adequate capacity for timely payment of financial commitments.
The rating of Rs 200 million secured terms finance certificates, originally issued by KASB Leasing Limited with the repayment obligations currently vesting in KASB Bank Ltd, is maintained at 'A-' (Single A Minus).
The rating denotes a strong capacity for timely payment of financial commitments.
The ratings reflect adequate risk absorption capacity emanating from a substantially improved capital structure.
The ratings also recognise the strengthening human and infrastructure resources which make the bank well-positioned to achieve its targets. However, this ability, to some extent, is constrained by the increasingly competitive banking sector as well as the difficult operating environment.
While the management is committed to aggressive expansion of the deposit base and advances portfolio, given the limited branch network and brand identification, KASB faces an uphill task in competing against the better known and larger sized private banks.
The bank has aggressive targets for 2004. It plans to expand the advances portfolio substantially. At the same time, the bank plans to restrict the level of money market operations, while increasing COT/margin financing.
The main component of the advances' portfolio would be working capital/trade finance.
The bank, in line with the sector, has recently launched its consumer financing scheme and is projecting a reasonable business volume from this avenue.
The bank is currently operating with a network of 20 nation-wide branches with two more to be opened soon. The bank has managed to increase its advances portfolio to Rs 3.4 billion by the end of March 2004, which is in line with the targets.
The targeted growth is planning to be financed through deposits. The bank aims to double its deposit base during 2004.
To achieve this, in addition to improving customer services and providing technology-based facilities, the bank has also kept the return on deposits slightly highly than peers.