Press Release

Entity Ratings of Security Investment Bank Limited
 

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Karachi, August 8, 2014: JCR-VIS Credit Rating Company Limited has revised the long term entity rating of Security Investment Bank Limited (SIBL) from ‘A’ (Single A) to ‘A-’ (Single A Minus); short term rating has been maintained at ‘A-2’ (A-Two). Outlook on the assigned rating has been revised from Negative to Stable.

Equity base of SIBL stood lower than the minimum capital requirement (MCR) of Rs. 1b stipulated for end-June, 2013. Various reforms are under discussion at the regulatory level to revive the NBFCs sector including downward revision in MCR. In the absence of a clear roadmap with regards to future strategic direction attributable to pending developments at the regulatory level, any meaningful change in scope of activities undertaken by the bank is not expected.

In view of the constrained operating environment, SIBL has continued to scale down volume of business activities as per the Board’s approved policy to contain risk. These primarily comprise investment activities while lending portfolio has remained restricted over the years. Moreover, exposure to the stock market has marginalized over time. During 1QFY14, the bank reported higher revenues attributable to dividend received from its subsidiary that is being wound up.

While being MCR non-compliant, risks arising from the current balance sheet exposures are considered manageable in context of the bank’s risk absorption capacity. Approximately 60% of the asset base is funded by the company’s own equity. Moreover, around 47% of total assets comprise government securities reflecting sound liquidity & asset profile.

For further information on this rating announcement, please contact Ms. Sobia Maqbool, CFA at 021-35311861-70 or Mr. Maimoon Rasheed at 042-36610681-84 or fax to 021-35311872-3.



Abdur Rahim, ACII
Advisor

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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