The Pakistan Credit Rating Agency (Pacra) has assigned long-term and short-term entity ratings of BBB (Triple B) and "A2" (A two), respectively to the Bank of Khyber (BoK). These ratings denote low expectation of credit risk emanating from an adequate capacity for timely payment of financial commitments.
The ratings reflect strong patronage of the government of NWFP, being the majority shareholder (51 percent) and sound risk absorption capacity of the bank. However, with weak institutional building over the years, the bank's ability to mobilise deposits and their effective deployment remained constrained reflected by limited size of operations and high NPLs ratio.
With a recent change in top management, there is an increasing focus on adoption of more formalised policies and procedures and strengthening of operating platform and systems and processes. Meanwhile, efforts are also being made to improve the quality of human resource through new hirings at the senior management level.
The ratings are dependent on management's ability to effectively implement its overall business strategy and strengthening of the systems and processes, including the risk management framework. The support of the government remains a critical rating factor.-PR