Press Release

JCR-VIS Assigns Positive Outlook to Sindh Bank Limited

Karachi, June 30, 2014: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has maintained the entity ratings of Sindh Bank Limited (SBL) at ‘AA-/A-1+’ (AA Minus/A One Plus). Outlook on the assigned ratings has been revised from Stable to Positive.

Ratings take into account the profile of sponsor, with entire shareholding vested with the Government of Sindh (GoS). The bank features a high level of Capital Adequacy Ratio; given the bank’s growth plans, capitalization is expected to remain strong over the foreseeable horizon, assuming no material deterioration in asset quality.

In 2013, the bank expanded its footprint further, with 200 branches at year-end 2013. Another 25 branches are proposed to be set-up in the on-going year, including 5 Islamic banking branches. The bank has been able to achieve improvement in cost of deposits in 2013, primarily due to reduced reliance on costly GoS deposits and growth in market based deposits, which are less expensive. At end 2013, GoS deposits comprised a smaller proportion of deposit mix vis-à-vis the preceding year. Developing granularity in deposit mix over time is considered important to maintain sound liquidity profile.

Balance sheet composition witnessed change on account of growth in financing activities. While exposures have been built in new sectors, sugar continues to comprise the largest proportion of the corporate loan book. Client wise concentration is also on the higher side. Delinquencies in the portfolio have so far been minimal. Diversification in portfolio is nevertheless warranted to address concentration related risks. Commodity related sectors are likely to dominate the bank’s lending portfolio given the management’s favorable outlook regarding the same. The bank also holds a sizeable investment portfolio; given the additional investment made in PIBs having long duration, the bank’s exposure to interest rate risk has heightened lately.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 604) at 021-35311861-70 or fax to 021-35311873.

Abdur Rahim, ACII

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