Ratings of Zarai Taraqiati Bank reaffirmed

Karachi, July 12, 2012 (PPI-OT): JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Zarai Taraqiati Bank Limited (ZTBL) at ‘B+/B’ (Single B Plus/Single B). JCR-VIS has also reaffirmed ratings of ‘AAA/A-1+’ (Triple A/A-One Plus) assigned to government guaranteed debt and deposits mobilized by the bank. Outlook on the assigned ratings is ‘Stable’.

Ownership stake in the bank is mainly held by Government of Pakistan (GoP) while residual shareholding is vested with Provincial Governments. The ‘AAA/A-1+’ ratings take into account the federal government guarantee on credit lines obtained from the State Bank of Pakistan (SBP) that form substantial portion of ZTBL’s funding.

The bank has, so far, not made any principal or mark-up payments based on the fact that restructuring terms have not been finalized. Safety of deposits mobilized by the bank is also guaranteed under the Bank’s (Nationalization) Act, 1974.

Entity ratings of ‘B+/B’ assigned to ZTBL depicts its financial profile, excluding the impact of sovereign guarantee. ZTBL is engaged in the business of providing agricultural credit to farmers in rural areas and low income households of the country.

Loan pricing is being adjusted upwards by taking into account the bank’s funding and operating cost to improve the bank’s earnings profile and achieve financial and operational sustainability. Delinquencies in the portfolio have increased during FY11, partly on account of flood related losses. Moreover, net NPLs as a percentage of tier-1 capital are considered on the higher side.

For more information, contact:
Mr. Javed Callea
Advisor
JCR-VIS Credit Rating Company Limited
Tel: +9221 35311861 (10 lines) (Ext: 501)
Fax: +9221 35311872-3
E mail: javed.callea@jcrvis.com.pk