JCR-VIS Credit Rating Co Ltd (JCR-VIS) has maintained entity ratings of Meezan Bank Limited (MBL) at 'A+ /A-1' (Single A Plus/A-One). Outlook on the medium to long-term rating has been revised from 'Stable' to 'Positive' in view of favourable trends witnessed in the bank's performance.
As pioneers of Islamic Banking. MBL had capitalised on the first-mover advantage and built a strong franchise amongst the masses, evident in the highest market share in term of deposits in the Islamic Banking Sector. The expansion in branch network to 166 branches had been instrumental in facilitating the growth in retail deposits. During 2008, the proportion of Current and Saving Accounts had enhanced further, in addition to which a more granular mix had also emerged gradually. Management plans on consciously maintaining these trends over the time.
Low-cost deposit mix enhanced core earnings in FY08, though overall profitability indicators came under stress on account of losses from capital market operations. Till now, gross infection in the bank's portfolio is low. Most of the delinquencies have emanated in the corporate portfolio and the quality of consumers lending has so far fared better than most of the market players.
A challenging operating environment will continue to test the resilience of market participants. Continuing to focus on key elements of risk and drawing on experience, MBL's management expects to achieve growth in line with projected targets. The impact of developments in the external environment on the bank's growth plans will be monitored by JCRVIS.-PR