Karachi: VIS Credit Rating Company Limited has reassured the financial stability of Meezan Bank Limited by reaffirming its entity ratings at ‘AAA/A-1+’ (Triple A/A-One Plus). This decision highlights the bank’s highest credit quality and negligible risk factors, which are only slightly more than those associated with risk-free government debt. The outlook on these ratings remains ‘Stable’.

The reaffirmation also extends to the bank’s Basel 3 Compliant Additional Tier-1 and Tier-2 instruments, rated at ‘AA+’ and ‘AAA’, respectively. This announcement follows the previous rating action from June 28, 2024.

Meezan Bank, the largest Islamic commercial bank in Pakistan, started operations in 2002 after receiving the first Islamic commercial banking license from the State Bank of Pakistan. Its major shareholders include Noor Financial Investment Company Limited, Pakistan Kuwait Investment Company (Pvt.) Limited, and the Islamic Development Bank.

The bank’s strong ratings reflect its significant position within Pakistan’s banking sector and the robust profile of its sponsors. Meezan Bank’s operations are deeply rooted in Shariah principles, which enhances trust and alignment within the Islamic finance sector.

The bank’s asset base has seen substantial growth, with a diversified financing portfolio and a conservative investment approach focused on government-backed securities. Credit risk is effectively managed through disciplined underwriting and proactive provisioning, keeping non-performing financings within manageable limits.

Meezan Bank continues to maintain a granular deposit base with a leading low-cost current and savings account structure. Its liquidity indicators are strong, supported by ample liquid assets and diverse funding sources, which contribute to the bank’s financial stability.

Despite a challenging monetary policy environment, the bank’s profitability remains strong, buoyed by its focus on non-markup income from fees and forex revenues. Efficiency ratios are favorable, aided by scale benefits and ongoing cost management efforts.

The bank’s capitalization is robust, with strong internal capital generation and healthy capital adequacy ratios, comfortably above regulatory requirements. Looking ahead, the bank’s solid funding base, diversified income sources, and sound risk management practices are expected to continue supporting its profitability.