Press Release

JCR-VIS Upgrades Entity Ratings of Dubai Islamic Bank Pakistan Limit (DIBPL)

Karachi, June 30, 2014: JCR-VIS Credit Rating Company Limited (JCR-VIS) has upgraded the entity ratings of Dubai Islamic Bank Pakistan Limited (DIBPL) from ‘A/A-1’ (Single A/A-One) to ‘A+/A-1’ (Single A Plus/A-One). Outlook on the assigned rating is ‘Stable’.

As a wholly owned subsidiary of Dubai Islamic Bank PJSC, United Arab Emirates (DIB), DIBPL has been operating in Pakistan for over 8 years. As per the arrangement allowed by the State Bank of Pakistan (SBP), DIB extended US $31m sub-ordinated debt to DIBPL, which has been placed with SBP in a non-earning foreign currency account. Following this, Capital Adequacy Ratio stands enhanced at 22.02% at end-Mar’14 and the bank is now compliant with the minimum capital requirement.

In addition to creating room for growth in overall risk weighted assets, a larger capital base has increased the bank’s capacity for per party exposures. Over the next three years, the bank plans to pursue aggressive growth in financing portfolio, increasing it by more than two and a half times from current levels. A shift in portfolio mix is also projected; consumer portfolio which currently comprises about one-third of total financing is projected to decline to under one-fourth of the portfolio. Portfolio quality indicators have depicted improvement in 2013, with net infection declining to 4.0%.

There was a slight increase in deposit concentration levels in 2013; liquidity levels however remained comfortable. Continuing expansion in foot print will facilitate in realization of the bank’s objectives to achieve broad based growth in deposits. Cost of deposits of the bank is one of the lowest in the banking sector. Basic earnings of the bank were only marginally higher in FY13. The bank is pursuing a well rounded corporate engagement strategy to enhance fee based income as well. In the on-going year, the bank is also looking to rationalize cost to income ratio significantly.

A sound corporate and Shari’ah governance framework is in place at DIBPL. There have been changes at senior management level in recent periods, including fresh inductions and change in portfolios of some senior executives; stability within the core management team is considered essential for implementing the bank’s strategic objectives.

For further information on this rating announcement, please contact Mr. Jamal Abbas Zaidi (Ext: 408) or Ms. Sobia Maqbool, CFA (Ext: 604) at 92-21-35311861 or fax to 92-21-35311873.

Abdur Rahim

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 2014 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