Press Release

JCR-VIS Reaffirms Ratings of Habib Bank Limited at AA+/A-1+

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Karachi, June 13, 2011: JCR-VIS Credit Rating Company Limited has reaffirmed the entity ratings of Habib Bank Limited (HBL) at ‘AA+/A-1+’ (Double A Plus/A-One Plus). Outlook on the ratings is ‘Stable’.

HBL is the largest private sector bank in Pakistan, having a market share of 12.6% in domestic deposits at year-end 2010. Moreover, deposit base features granularity and is characterized by a high percentage of retail deposits. Overall liquidity profile of the bank is considered strong.

In line with industry trends, fresh lending has largely remained restricted. Since the on-set of slowdown in economic activity, government and government backed exposures in the books of scheduled banks have been on a rise. In a domestic context, this may be the best credit available. However, the ability of public sector to timely service its obligations other than treasury securities, the quantum of which has increased, may be dependent on future budgetary resources. Overseas operations comprise almost 15% of the total resource base of HBL. Exposure is highest in case of UAE, both in terms of money lent and deposits mobilized.

Non-performance in the lending portfolio has increased in 2010. Strong profitability has allowed the bank to absorb the impact of rising NPLs. Exposure to corporate sector comprises the largest proportion of advances and will remain the bank’s area of focus. Efficiency indicators have witnessed improvement on a timeline basis.

In the backdrop of increased credit risk in the environment, performance of the bank has showcased resilience. Given the prevailing economic conditions, the operating environment is expected to remain challenging over the foreseeable horizon.

For further information on this rating announcement, please contact Ms. Sabeen Saleem, CFA (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 506) at 35311861-70 (10 lines) or fax to 35311873.

Faheem Ahmad
President & CEO

Information herein was obtained from sources believed to be accurate and reliable; however, JCR-VIS Credit Rating Company Limited (JCR-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. JCR-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. JCR-VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings. JCR-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 2011 JCR-VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to JCR-VIS.

JCR-VIS Credit Rating Company Limited