Press Release

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

Karachi, June 01, 2012: JCR-VIS Credit Rating Company Limited has reaffirmed the entity ratings of Meezan Bank Limited (MBL) at ‘AA-/A-1+’ (Double A Minus/A-One Plus). Outlook on the outstanding ratings is ‘Stable’.

Core strength of MBL continues to be its growing deposit base, representing almost one-third of the Islamic banking industry’s deposits. Moreover, the deposit base features increasing granularity over time; low cost of funding of the bank compares favorably to peers. In 2011, the bank achieved 30% growth in deposits which has been facilitated by the expanding branch network, with plans to increase the same to 310 by December 2012 from existing network of 288 branches.

Growth in deposits has largely been channeled into GoP Ijarah Sukuks that represented more than 40% of asset base of the bank. Given the bank’s sizeable holding of GoP Ijarah Sukuks, both in relation to its assets and the aggregate amount of such Sukuks outstanding, the bank’s ability to off-load these in the market, may be restricted to some extent. Diversification in asset mix will also facilitate the bank in broadening its sources of revenues.

Financing portfolio of the bank has yet to achieve a sizeable quantum. Furthermore, financing portfolio depicts concentration, though this risk is mitigated to some extent by the sound risk profile of most counterparties in the portfolio. Going forward, in addition to growth in corporate segment, the bank plans to grow its Commercial and SME portfolio. Meaningful increase in size of financing portfolio will test the underwriting capabilities of the bank further. So far, level of delinquencies has remained low.

Even with rapid expansion in branch network, operational efficiency of the bank has remained strong. Moreover, spreads of MBL are also on the higher side and comparable with larger banks in the sector. Profit after tax doubled to Rs 3.4 billion during FY11 which has strengthened the capitalization level further. Capital Adequacy Ratio was reported at 15.04% as of March 31, 2012.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 506) at 92-21-35311861 or fax to 92-21-35311873.



Syed Ziauddin Ahmed
Advisor

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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 2012 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