Lahore, December 20, 2018 (PPI-OT): The ratings reflect Soneri Bank’s sustained business profile as reflected in slightly higher net interest margin. The bank’s funding base comprise of deposits and borrowings. During 9MCY18, customer deposits witnessed growth of 3% against industry growth of 6% – customer deposit system share inched down to 1.7% as at end-Sep18 (end-Dec17: 1.8%). Contribution of low costs deposits witnessed marginal decline.
The lending portfolio recorded growth of ~6% (against industry growth of 14%). Non-Performing Loans witnessed a slight increase. Fee based income also witnessed some growth and needs to seek a higher stimulant. With a largely maintained cost structure, the bank’s profitability got additional support from reversal in provisioning. Hence, spread was largely maintained. Continued enhancement in non-fund based exposure and sustainable growth in fee income is important for future years. At the same time, the strategy would be to mobilize low cost deposits with an increase in branch network. The bank’s CET-I stands at 10.04% as at end-Sep18. Total CAR stands at 12.60%. The bank has issued additional Tier-1 TFC (PKR 4,000mln), which will enhance its total eligible capital further.
The rating is a function of 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: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com