Karachi, June 29, 2021 (PPI-OT): VIS Credit Rating Company Limited has reaffirmed the entity ratings of Pak Brunei Investment Company Limited (PBIC) at ‘AA+/A-1+’ (Double A Plus/A-One Plus). The long term rating of ‘AA+’ signifies high credit quality, protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. The short-term rating of ‘A-1+’ signifies highest certainty of timely payment; short-term liquidity, including internal operating factors and/ or access to alternative sources of funds, is outstanding and safety is just below risk free Government of Pakistan’s short-term obligations. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on June 29, 2020.
Assigned ratings derive strength from sovereign sponsor profile. PBIC is Development Finance Institution formed under a joint venture agreement between Government of Pakistan (GoP) and Government of Brunei (GoB); each having an equal ownership. During the period under review, PBIC pursued a conservative lending strategy in 2020 given the challenging macroeconomic environment amidst COVID-19. Asset quality indicators have weakened in the outgoing year due to one single client; however comfort is drawn from FSV benefit of 100% against the non-performing client.
Going forward, management envisages limited growth in the advances portfolio on the back of subdued revival transaction pipeline and fresh build-up expected to result in new exposures over the next 9-12 months given longer gestation periods. Exposure to credit risk emanating from investment portfolio remain limited given sizeable contribution of federal government securities. Duration of sovereign exposures has been timely aligned with changing macroeconomic environment. Going forward, management envisages investment portfolio to book gradual increase emanating from floating-coupon PIBs, investments in listed shares and mutual funds.
Overall profitability profile has witnessed significant improvement in 2020 due to higher net interest income as a result of immediate re-pricing of liabilities vis-a-vis assets and sizeable capital gains realized on debt securities. Liquidity profile of the company is considered sound in view of the adequate liquid assets in relation to deposits and borrowings. PBIC also has access to sizeable unutilized funding lines which can be drawn upon in case of need. Capitalization indicators including Capital Adequacy Ratio and net-NPL to Tier 1 equity remain compliant with rating benchmarks. Ratings remain dependent on maintaining liquidity and capitalization buffers and strong asset quality indicators.
For more information, contact:
Director Compliance and Rating Analytics,
VIS Credit Rating Company Limited
VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi, Pakistan
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: bilal@jcrvis.com.pk
Website: https://www.vis.com.pk/