Press Release

JCR-VIS Maintains Long Term Entity Rating of Khushhali Bank Limited at A- with Stable Outlook

Karachi, April 30, 2009: JCR-VIS Credit Rating Company Limited (JCR-VIS) has maintained the medium to long term entity rating of Khushhali Bank Limited (KBL) at ‘A-’ (Single A Minus) with a Stable outlook.

KBL is the largest institution in the local MFB sector, with 114 branches set up in 89 districts of the country. Ratings draw strength from a stable and experienced management team in addition to sound portfolio quality indicators. The bank has hitherto supported its operations by way of a credit line provided by Asian Development Bank (ADB) as part of the Microfinance Sector Development Program. The repayment of ADB loan, stretched over a period of 12 years, is due to commence in May 2009.

With increasing deployment of funds in core operations and absence of alternative funding sources, liquid assets in relation to outstanding liabilities have reduced over time. In view of this, short term rating has been revised from ‘A-1’ (A-One) to ‘A-2’ (A-Two). The bank rolled out 10 pilot branches to mobilize deposits in 2008, which will be extended to 40 outlets during the on-going year. The bank initially plans to tap onto its existing clientele for mobilization of deposits.

As the bank taps into commercial sources of funding, cost of borrowing is expected to increase. In a drive to improve institutional sustainability, the bank has revised loan pricing upwards to bring it in line with competition while streamlining its cost structure. The impact of these measures on operating profitability of the bank will be observed over time.

For further information on this rating announcement, please contact Ms. Sabeen Saleem (Ext: 510) or Ms. Sobia Maqbool (Ext: 506) at 5311861-70 or fax to 5311873.

Faheem Ahmad
President & CEO

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited VIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2009 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.

JCR-VIS Credit Rating Company Limited