Lahore, June 28, 2022 (PPI-OT): The ratings reflect the association of FWBL with the Government of Pakistan (GoP) – the major shareholder. The Bank received various capital injections from the Ministry of Finance (MoF), latest in CY17, mainly to comply with minimum capital requirements. The bank has not been able to publish its financial statements since December 2018 and all the numbers / financials mentioned in this report are based on management accounts and subject to audit by the external auditor. The Board of the bank remained non-functional since January 2019 due to vacancies not being filled. MoF has appointed Chairman/Directors on the Board of First Women Bank Limited on September 09, 2021.
Now with the completion of the Board, the finalization of the external audit process for the last three years should be expedited. As per the unaudited financial statements, the deposit system share inched down (end-Dec21: 0.1%, end-Dec20: 0.2%) whilst CASA went up to 79.5% (end-Dec20: 70.7%). The deployment of funds was towards government securities which recorded a sizable increase. Advances witnessed a marginal uptick. It remains essential to hold and improve asset quality. The bank’s financial performance deteriorated during the calendar year 2021.
Total income recorded a decline to PKR 1.1bln in CY21 (CY20: PKR 1.5bln); mainly emanating from a decline in non-markup income due to a lesser quantum of gain from government securities. Higher provisioning expense was recorded which affected the bottom line and the bank reported a loss of PKR 1,730mln (CY20: profit of PKR 373mln). The current management team took initiatives to improve the revenue stream and managed to contain the cost. Bank’s PAT for 3MCY22 clocked at PKR 47mln. The Bank’s investment portfolio is entirely comprised of government securities that are augmented during the year.
Going forward, the management is planning to take various strategic initiatives including, improvement of net spread through reducing its funding cost, expansion of retail customer base through launching BDO model, improving lending business through onboarding investment grade rated corporate, highly performing SME business and re-branding corporate image. Outlook captures the delay in finalization of financial statements, diluted performance, and erosion of equity base over the last few years.
The ratings capture the need to sustain a growth trend in profitability and deposits. Revision and successful execution of the business strategy, while improving the efficacy of the risk management framework to improve asset quality.
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