Press Release

Ratings of Summit Bank Limited

Karachi, June 30, 2014: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Summit Bank Limited (SBL) at ‘A-/A-3’ (Single A Minus/A-Three). Rating of the subordinated debt instrument has been reaffirmed at ‘A-(SO)’ (Single A Minus (SO). Ratings continue to be placed under ‘Rating Watch - Developing’ Status.

SBL issued convertible preference shares of Rs. 2.2b in 2013 while another 65% rights share issue of Rs. 7b is on the anvil. The bank has already received Rs. 2.5b from the principal sponsor in the on-going year as advance against the proposed rights issue with a commitment to provide the remaining amount, in case of shortfall from other shareholders.

At current levels, the bank’s key financial indicators are under significant stress. The planned equity injection is likely to enable the bank to meet the Minimum Capital Requirement (MCR), provided the bank does not incur major loss in 2014. SBP has allowed extension in meeting the MCR and CAR till September 30, 2014. Ratings will be re-assessed once the rights issue process comes to a close.

Lending activities remained restricted amidst capital constraints. The bank achieved reduction in non-performing loans (NPLs) over the year on account of recoveries and declassification; however the quantum of NPLs is still sizeable in relation to net equity. Portfolio quality may need to be closely monitored for credit losses in future.

Deposit mix of the bank has posted improvement, as reflected in growth in current accounts relative to end FY12 level while deposit cost has also posted meaningful improvement. Earnings however remained constrained by sizeable amount of non-performing assets carried on books. Capital injection is likely to have a positive impact on the bank’s earnings stream and liquidity profile.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 408) or Ms. Sobia Maqbool, CFA (Ext: 506) at (+92-21) 35311861-70 or fax to (+92-21) 35311872-3.

Abdur Rahim, ACII

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited 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.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.VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings.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 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.

JCR-VIS Credit Rating Company Limited