Press Release

JCR-VIS Reaffirms Entity Ratings of Pak Oman Investment Company Limited

Karachi, June 27, 2018: JCR-VIS Credit Rating Company Limited has reaffirmed the entity ratings of Pak Oman Investment Company Limited (POIC) at ‘AA+/A-1+’ (Double A Plus/A-One Plus) with a ‘Stable’ Outlook. The previous rating action was announced on June 2, 2017.

The ratings reaffirmation takes in to account the company’s joint venture shareholding structure along with strong investors’ profile of two major sovereign owners; sovereign ratings of Sultanate of Oman have been recently revised, by international rating agencies, due to weakening in economic indicators. Ratings, however, take in to account the comfortable capitalization levels, sound business risk profile and commitment of financial support from sponsors.

The ratings further factor in the healthy growth witnessed in lending portfolio where gross advances have increased to Rs. 19.7b (FY16: Rs. 15.9b) at end-FY17 on account of an aggressive strategy undertaken by the management coupled with a focus to improve loan quality. POIC have reputed clients with whom the company has well established relationships, resulting in repeat business over years. Sector-wise composition of advances depicts adequate diversification, while client-wise concentration risk remained on higher side due to limited client base. Asset quality indicators continue to improve over the years while management anticipates infection levels to reduce even further given its recovery efforts and overall growth in portfolio. Trends in this regard would be tracked, going forward.

During the outgoing year, volumetric growth in earning assets contributed positively to net mark-up income. However, lower investment income along with the imposition of super taxation offset the impact of higher lending, resulting in a decline of profit after tax. Going forward, company’s ability to maintain earnings and mark-up spreads at sustainable levels will be important. Liquidity profile of the company as manifested in liquid assets in relation to total deposits & borrowings ratio is considered commensurate with the assigned ratings. Moreover, growth in advances has resulted in lower Capital Adequacy Ratio (CAR); albeit the same remains comfortably above the regulatory requirement.

For further information on this rating announcement, please contact the undersigned (Ext: 201) at 35311861-70 or fax to 35311872-3.

Javed Callea

JCR-VIS Entity Rating Criteria: Government Supported Entities (June 2016)

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 2018 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