Press Release

VIS Reaffirms Entity Ratings of Pak Brunei Investment Company Limited

Karachi, June 26, 2019: VIS Credit Rating Company Limited has reaffirmed the entity ratings of Pak Brunei Investment Company Limited (PBIC) at ‘AA+/A-1+’ (Double A Plus/A-One Plus). The long term rating of ‘AA+’ signifies high credit quality, protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. The short-term rating of ‘A-1+’ signifies highest certainty of timely payment; short-term liquidity, including internal operating factors and/ or access to alternative sources of funds, is outstanding and safety is just below risk free Government of Pakistan’s short-term obligations. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on June 27, 2018.

The assigned ratings of PBIC continue to derive strength from strong sponsor profile of Government of Pakistan and Brunei Investment Agency. The ratings also take into account PBIC’s sound capitalization levels and liquidity profile. Comfort is also drawn from the strong asset quality maintained by the company, which is reflective of the sound risk and control infrastructure in place. In addition to conventional lending, business model of PBIC advocates revival financing for mid-sized corporate entities that may be undergoing financial stress.

During the period under review, PBIC maintained its advances portfolio in its three business segments with loan book increasing to Rs. 20.6b (2017: Rs. 19.1b) at end-December 2018. Considering the current economic scenario, growth in long term advances is expected to remain subdued with greater focus on short tenure along with a consolidation approach towards lending. Asset quality indicators exhibited strengthening on account of restructuring from projects taken up under revival financing and timely recoveries.

Apart from pressure on spreads, core profitability has depicted an increase on the back of volumetric increase in loan book and investments in floating government securities. However, bottom line of the company was adversely impacted by lower non markup income and unrealized losses on its investments portfolio. Overall liquidity profile is considered manageable in view of adequate liquid assets in relation to deposits and borrowings, and regulatory compliant Liquidity Coverage Ratio (LCR). However, going forward PBIC will need to maintain Net Stable Funding Ratio (NSFR) in line with the regulatory requirement. Overall capitalization indicators remain sound in view sizeable cushion in Capital Adequacy Ratio (CAR) vis-à-vis the regulatory requirement.

For further information on this rating announcement, please contact the undersigned (Ext: 201) or Ms. Muniba Khan at 021-35311861-70 or fax to 021-35311873.

Javed Callea

Applicable Rating Criteria: Government Supported Entities (June 2016)

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 2019 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

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