Lahore, June 28, 2021 (PPI-OT): The Bank of Punjab has built a franchise around its name, which itself is a reflection of strong parentage. The sponsor has been instrumental in the revival of the Bank and now the institution stands on its own support. It took a long period which witnessed concerted efforts by the management duly backed by the sponsors’ support to reinvigorate the Bank. The incumbent management, under the new leadership, has revamped and strengthened the governance and compliance structure in place which is essential for oversight and dynamic operations of the Bank.

The areas of focus envision three phases (control, consolidation and growth), which help lead the bank from an augmented control environment to a growth arena. Customer focus and geographical diversification and expansion are the key elements. The Bank grew its customer’s deposit’s base by 21% to stand at PKR 835bln – higher than the industry’s growth. 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. Asset quality remains a challenge where a hike in NPLs during the year has led to increased provisioning expense being recorded.

However, on a prudence basis, subjective classification and general provisioning were done to ensure that asset quality remains unimpaired going forth. The bank’s Capital Adequacy Ratio (CAR) clocked in at 16.2% as at end-Dec20 (end-Dec19: 14.8%), providing BOP with a healthy cushion to expand its advances’ book in line with its stated strategy, whereby the growth in risk assets will be covered through insurance and first-loss guarantees wherever available. COVID-19 is an ongoing challenge. The proactive measures taken by the regulators and other concerning bodies, alongside the measures taken by the banks, have mitigated the potential damages much anticipated from this pandemic. As a result, the banking industry remained protected and in fact posted record profits.

The ratings are dependent on the financial risk profile of the bank, mainly emanating from the sustenance of capital adequacy and continued healthy profitability trend in line with the management’s plans. Any weakening in asset quality will in turn put pressure on the bank’s profitability and risk absorption capacity.

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