The Individual ratings of these banks reflect their modest balance sheet strength in an international context, and generally good profitability. The ratings also factor the very volatile operating environment in Pakistan, which poses significant challenges and risks.
Fitch Ratings on Monday affirmed the ratings of the following four banks:
-- MCB Bank Limited (MCB): Individual rating affirmed at 'D', Support affirmed at '5';
-- National Bank of Pakistan (NBP): Individual rating affirmed at 'D', Support affirmed at '5';
-- United Bank Limited (UBL): Individual rating affirmed at 'D', Support affirmed at '5'; and
-- Habib Bank Limited (HBL): Individual rating affirmed at 'D/E', Support affirmed at '5'.
The agency expects the prevailing extremely weak economic conditions in Pakistan to affect the financial profile of these banks. Although their Individual ratings, at the low end of Fitch's scale, substantially capture these risks, the agency also notes that their ratings may still face a downward bias, should the economic weakening cause significant deterioration to their financial profiles.
MCB has the strongest financial profile among Pakistani banks, as reflected by its adequate capitalisation (equity/assets 11.1 percent at end-9M08), low net NPL/equity ratio (2.6 percent at end-9M08) and strong profitability (ROA of 3.6 percent in 9M08). However, given the very weak domestic economy, MCB's financial profile is also expected to come under pressure, with any significant weakening in either asset quality or capitalisation likely to exert downward pressure on the rating.