Press Release

JCR-VIS Assigns Preliminary Rating to Proposed Tier 2 TFC by Silk Bank Limited

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Karachi, April 24, 2017: JCR-VIS Credit Rating Company Limited has assigned preliminary rating of ‘A-’ (Single A Minus) to the planned Tier 2 Term Finance Certificates (TFC) issue of Silk Bank Limited (SBL). Outlook on the assigned rating is ‘Stable’.

SBL is in process of issuing a Basel 3 compliant unsecured, subordinated privately placed Tier 2 TFC amounting to Rs. 2.0billion (inclusive of Green Shoe Option of Rs. 500million). The TFC has a tenor of 8 years with semi-annual profit payment frequency. Purpose of TFC issuance is to support the bank in strengthening its overall capitalization indicators.

The assigned rating incorporates structural features of the TFC whereby the instrument carries a guarantee for a period of one year of an amount equivalent to two interest payments as well as investment of 50% of the issue size in liquid government securities. Rating may be reviewed in the absence of structural features of the TFC.

Financial profile of the institution has posted noticeable improvement in 2016. SBL posted profit before tax of Rs. 1.29billion in 2016 vis-à-vis loss in 2015. Moreover, net infection levels have declined from 5% at year-end’2015 to 2.7% at year-end’2016. SBL had MCR eligible capital of Rs. 11.67billion at year-end’2016. Liquid assets carried on the balance sheet are lower vis-à-vis peers. Increase in liquidity buffer on the balance sheet is planned. Moreover, diversification in deposit mix is expected with branch expansion planned to be undertaken in the ongoing year.

For further information on this rating announcement, please contact the undersigned (Ext: 306) at 35311861-70 (10 lines) or fax to 35311873.

Faryal Ahmad Faheem
Deputy CEO

Applicable Rating Criteria: PRIMER - Commercial Banks (November 2015)

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 2017 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