Lahore, September 23, 2021 (PPI-OT):BAHL is planning to issue a rated, unlisted, unsecured and subordinated TFC-VIII. The issue amount is upto PKR 5bln (inclusive of a Green Shoe option of PKR 2bln) to contribute towards AL Habib’s Tier II Capital. The funds so raised would be utilized in the Bank’s normal business operations. The tenor of the instrument is upto 10 years. The profit rate is 6M-KIBOR plus 75bps and would be paid semi-annually in arrears on the outstanding principal. The instrument is structured to redeem 0.02% of the Issue Amount per semi-annual period in the first nine years and remaining Issue Amount in two equal semi-annual installments of 49.82% each in the tenth year.
BAHL may call the TFCs (either partially or in full), with prior approval of SBP, on any profit payment date on or after five years from the date of issue. Bank AL Habib has been portraying a history of stable and consistent growth for more than a quarter of a century. The Bank’s superior standing was witnessed in the global financial crisis almost a decade ago. The trend continued to this day. This was reflected in the sound asset quality of the Bank, compared to many medium and large institutions taking a significant hit on their advances book. The rating reflects the Bank’s improved performance, exceptional asset quality, satisfactory financial profile and healthy liquidity. The Bank’s customer deposits increased to PKR 1,205bln as at end-Jun21 (end-Dec20: PKR 1,083bln, end-Dec19: PKR 890bln).
Exceptional asset quality – lowest infection ratio in industry, maintained for last many years is reflective of Bank’s strength. Strong net mark up income was further augmented by enhanced non-mark up income. Trade finance is the Bank’s hallmark. The rating draws comfort from the Bank’s experienced management team, prudent risk management policies and deep-rooted relationship with clients -borrowers as well as depositors. As at end-Jun21 the Bank reported CAR of 13.9% (end-Dec20: 15.1%). COVID-19 is an ongoing challenge. The proactive measures taken by the regulators and other concerned bodies have mitigated the potential damage anticipated from this pandemic.
The rating is dependent on the Bank’s sustained risk profile. In the wake of heightened competition, profitable growth is a challenge while retaining the relative positioning in the industry. The equity base of the Bank and CAR are satisfactory and may continually be enhanced. The Bank is enhancing its footprints in the broad financial spectrum, which is essential to meet customers’ needs. Digital transformation is very important. BAHL is also into the acquirer business.
For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com