Lahore, June 28, 2021 (PPI-OT): The ratings reflect Soneri Bank’s maintained a business profile as reflected by intact system share in terms of deposits (end-Dec20: 1.8%, end-Dec19: 1.8%). SNBL’s customer deposits observed growth of 12.9%, CASA ratio also witnessed growth (CY20: ~69%; CY19: ~63%); where deposits remained tilted towards saving. Going forward enhanced deposit mobilization will remain vital in maintaining system share. Total income witnessed an increase of 34% YoY attributable to increased net mark up income and gain on securities. Spread also witnessed uptick (end-Dec20: 3.1%; end- Dec19: 2.8%).

Sustainability in net mark up income and non-markup income and continued enhancement in non-fund based exposure is important for future years. Attrition in advances, compared to meagre growth observed by industry, led to an increased infection ratio (CY20: 6.2%; CY19: 5.1%). The Investment book has expanded significantly by 41% YOY, dominated by investments in PIBs. Going forward, the strategy is to strengthen the existing good relationships and digital platform by offering various unique solutions to its customers.

The Bank’s Tier-I ratio stands at 14.1% as at end-Dec20. Total CAR stands at 17.0%. 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 resumes amid variants of the pandemic continue to re-emerge.

The rating is a function of a bank’s ability to maintain its market position in the banking industry while strengthening its overall risk profile. Bringing efficiency in operational structure is important for long term growth. In the comparative landscape, adding granularity to deposits and advances is critical. Meanwhile, a sustainable increase in system share and consequent profitability would be ratings positive.

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