Press Release

JCR-VIS finalizes AA+ rating to Basel 3 compliant Additional Tier 1 instrument by United Bank Limited

Karachi, September 06, 2018: : Upon review of final signed legal documents, JCR-VIS Credit Rating Company Limited (JCR-VIS) has finalized rating of ‘AA+’ (Double A Plus) to United Bank Limited’s (UBL’s) Basel 3 compliant Additional Tier-1 (ADT-1) TFC. Outlook on the assigned rating is ‘Stable’. The assigned rating to ADT-1 instrument incorporates JCR-VIS standard notching criteria for Basel 3 compliant ADT-1 instruments issued by AAA rated Banks.

UBL is in the process of issuing a listed, perpetual, unsecured, subordinated, non-cumulative and contingent convertible debt instrument amounting up to Rs. 10.0 billion (inclusive of Green Shoe Option of Rs. 3.0 billion). The issue proceeds will contribute towards the Bank’s ADT-1 capital and will be utilized towards enhancement of the Bank’s business operations. UBL’s ADT-1 instrument will rank ahead of claims of ordinary shareholders but below the Bank's senior creditors, including depositors.

JCR-VIS has assigned entity ratings of AAA/A-1+ (Triple A/A-One Plus) to UBL indicating the highest credit quality. The assigned ratings reflect the Bank’s strong domestic franchise, existing market share and diversified operations. Moreover, financial profile is strong as evident from a robust liquidity profile and healthy existing and projected capitalization buffers. The asset base of the Bank stood at Rs. 1.82 trillion at the end of June 2018 while domestic deposits increased to Rs. 1.06 trillion. Tier-1 and overall CAR stood at 11.9% and 16.3% at the end ofH1’18, respectively; significantly above regulatory requirements.

The assigned rating depicts the relative risk of the Additional Tier-1 instrument in terms of the issuer’s full discretion on coupon payments, interest servicing from only profits for the current year, lock-in clause and conversion / write off feature in the case of pre-specified trigger events as per regulatory requirements. While the regulatory framework may not consider a missed coupon payment as a default; the credit rating methodology employed by JCR-VIS would treat such missed payments as an event of default. In the normal course of business, JCR-VIS believes that chances of non-performance risk are remote.

For further information on this rating announcement, please contact the undersigned (Ext: 201) at 021-35311861-70 or fax to 021-35311872-3.

Javed Callea

Applicable rating criterion: Commercial Banks Methodology – March 2018

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