Lahore, June 29, 2023 (PPI-OT): The Bank of Punjab has built a franchise around its name, which itself is a reflection of strong parentage. The bank enjoys a respectable position in its peer universe, also reflected by its system
share. The Bank grew its deposit base by 22% to stand at PKR 1,227bln - higher than the industry's growth where deposits remained tilted towards saving. The system share of the Bank has taken a positive contribution from the growth, which would lead the bank towards being classified as a large bank. However, the expensive funding avenues pose a challenge which is an area of focus for the current management of the bank. During CY22, the Bank maintained its PBT equal to CY21, taking benefit from the reversals. However, PAT declined by 13% to stand at PKR 10.8bln on account of the difference in taxation rate (CY21: PKR 12.4bln).
Coverage of non-performing loans has declined YoY, attributed to the benefit of collateral. At end-Mar23, the equity base is affected by a deficit in the investments. The mark-to-market losses of the investment book have caused a decrease in the equity base of the bank. Consequently, the capital adequacy ratio of the bank weakened to 11.7% (12.91% including advance subscription money for Tier-II Capital), which is expected to improve by end-Jun23 by a 2% to 3% margin, as projected by the management. For this, the prudent management of CAR remains essential. The risk absorption capacity of the bank is being augmented by a successive issuance of ADT-I and Tier-II bonds.
her ratings are dependent on the financial risk profile of the bank, mainly emanating from volumetric increases in core operations. Any weakening in asset quality will in turn put pressure on the bank's profitability and risk absorption capacity. Going forward, ample management of the CAR above the regulatory threshold remains necessary.
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