Press Release

Ratings of Summit Bank Limited
 

Karachi, July 19, 2013: JCR-VIS Credit Rating Company Limited (JCR-VIS) has maintained the long term entity rating of Summit Bank Limited (SBL) at ‘A-’ (Single A Minus); short term rating has been revised from ‘A-2’ (A-Two) to ‘A-3’ (A-Three). Rating of the subordinated debt instrument has also been maintained at ‘A-(SO)’ (Single A Minus (Structured Obligation)).

The assigned rating has been placed under ‘Rating Watch - Developing’ status in view of the re-capitalization plan being pursued by the bank. The process of equity injection of Rs. 2.155b in the form of preference shares is expected to be closed shortly, with Rs. 930m already received from the major sponsor. The issue is underwritten. Furthermore, the bank is working on raising additional capital of Rs. 5b. Timely materialization of capital injection plan is considered critical to reinstate the risk profile of the bank.

The bank is currently incurring operational loss in view of large quantum of non-earning assets inherited as a result of mergers. A multi-pronged strategy is being pursued by the management, which in addition to capital injection, entails, reduction in cost of funds by way of mobilization of current deposits and conversion of non-earning assets into earning assets. Material progress has been witnessed in the on-going year in terms of the quantum of fresh current accounts raised by the bank, bringing down cost of funds. Moreover, the management is also focused on increasing non-interest income and controlling administrative expenses. Continued progress on all fronts is required to achieve a turnaround in the bank’s performance. JCR-VIS will continue to closely monitor the same vis-à-vis the timelines made available.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 408) or Ms. Sobia Maqbool, CFA (Ext: 604) at (+92-21) 35311861-70 or fax to (+92-21) 35311872-3.



Jamal Abbas Zaidi
Deputy CEO

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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 2013 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