Press Release

JCR-VIS Upgrades Entity Ratings of Dubai Islamic Bank Pakistan Limited

Karachi, May 17, 2017: JCR-VIS Credit Rating Company Ltd. has upgraded the entity ratings of Dubai Islamic Bank Pakistan Limited (DIBPL) from ‘A+/A-1’ (Single A Plus/A-One) to ‘AA-/A-1’ (Double A Minus/A-One). Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on June 30, 2016.

Ratings assigned to DIBPL are driven by improvement in key performance areas and strong profile of its sponsor. Dubai Islamic Bank PJSC, UAE (DIB) has a well-established franchise in the UAE and has been rated ‘A/A-1’ (Single A/A-One) on the international scale by Islamic International Rating Agency. Risk profile of DIBPL derives support from the exhibited capitalization support from the sponsor by way of equity injection of over Rs. 4.7billion during 2016 and 1Q17. Resultantly, capitalization levels of the bank have strengthened with Tier-1 CAR stood at 11.21% (2015: 9.66%) at end-March’2017. Further strengthening of overall capitalization indicators is planned through issuance of a Basel 3 compliant tier 2 Sukuk in the ongoing year. Going forward, maintaining capital buffer over regulatory requirement in line with JCR-VIS’s benchmark is considered important.

During 2016, DIBPL pursued a consolidation strategy which has resulted in significant improvement in financing and deposit mix. Due to implementation of well-defined strategy, the financing portfolio declined during 2016. However, growth was noted in consumer and commercial & SME segment. Resultantly, contribution of corporate financing book declined to 60% (2015: 75%) of total portfolio while proportion of consumer financing increased to one-fourth of financing portfolio. Asset quality indicators of the bank compare favorably to peers.

On the deposit front, the positives were significant increase in proportion of non-remunerative deposits and reduction in depositor concentration levels. However, liquid assets carried on the balance sheet have declined and are on the lower side vis-à-vis peers. Going forward, management has projected to further increase the deposit base while maintaining cost of deposits at adequate levels.

Profit before tax of the bank increased by 93% during 2016 on the back of improvement in core profitability. The ratings are underpinned by the projected growth in profitability, improved efficiency and sustained asset quality indicators.

For further information on this rating announcement, please contact the undersigned (Ext: 501) at 92-21-35311861 or fax to 92-21-35311873.

Javed Callea

Applicable Rating Criteria: Commercial Banks Methodology - 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