Lahore, June 28, 2021 (PPI-OT): The ratings reflect the relative position of JS Bank in the country’s competitive banking landscape. This stems from largely intact customer deposit system share (end-Dec20: 2.4%, End-Dec19: 2.3%). Funding base comprising borrowings and deposits where term deposit witnessed a notable increase in CY20. Meagre increase in advances recorded attributable to risk-averse approach. NPLs witnessed a continued uptick; which is a concern. The bank has assembled a highly experienced and qualified top management team to head various departments. Markup income witnessed an increase attributable to the enhanced investments. The commendable increase recorded in non-mark- up income which in turn supplemented the profitability.

The bank was able to clock in good profitability in CY20 as compared to the last two years. The bank has achieved internal reorganization; this has been done to focus the targeted areas of growth while meeting the associated challenges. The bank’s strategy encompasses creating a pull strategy to create a more balanced approach to customer acquisition and refurbished digital platform by offering various unique solutions to customers. Further strengthening in risk framework is being ensured through segregation of credit and risk function into sub-categories based on functions and geography. The bank expects the profits to be boosted from growing direct and ancillary business. On a stand-alone basis, total CAR stood at 12.77% (Tier-I at 10.22% as at Dec20) needs to beef up to make room for future growth.

COVID-19 is an ongoing challenge. While it has taken a toll on many businesses, its ramifications are still unfolding. The proactive measures are taken by the regulators and other concerning bodies have mitigated the potential damages much anticipated from this pandemic. As a result, the banking industry remained protected and in fact posted record profits. Vigilance is required as the loan repayment cycle remains amid variants of the pandemic continue to re-emerge. Ratings are dependent on JS Bank’s ability to sustain its profitability to support the internal generation of capital. Meanwhile, upholding asset quality, maintaining system share in terms of advances and deposits, adding diversity to an income stream, sound CAR, and strong governance framework is critical.

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