Press Release

JCR-VIS Maintains Entity Ratings of Dubai Islamic Bank Pakistan Limited

Karachi, June 30, 2015: JCR-VIS Credit Rating Company Ltd. has maintained the entity ratings of Dubai Islamic Bank Pakistan Limited (DIBPL) at ‘A+/A-1’ (Single A Plus/A-One). Outlook on the assigned rating has been revised from ‘Stable’ to ‘Positive’. The previous rating action was announced on June 30, 2014.

Ratings assigned to DIBPL take into account the strong franchise of the institution given its association with Dubai Islamic Bank (DIB), the largest Islamic bank operating in United Arab Emirates. Islamic International Rating Agency has assigned ratings of ‘A/A-1’ (Single A/A-One) to DIB on the international scale. Parent support has been witnessed over time both in the form of financial support and technical knowledge transfer. Ratings also draw strength from the standalone financial profile of DIBPL reflected by solid funding base largely comprising cost effective retail deposits, sound asset quality indicators, increasing core earnings and bank’s moderate risk appetite.

Liquidity profile remains comfortable; the bank has a well diversified deposit mix in addition to which its cost of deposits is one of the lowest in the overall banking sector. The management remains focused on pursuing broad based growth in deposits in a cost effective manner. Market share of DIBPL in terms of deposits of Islamic banking industry stood at 7.8% at end-FY14 while it was 1% in relation to overall banking sector deposits. Approaching maturities of GoP Ijarah Sukuk in the back drop of no fresh issuance since June 2014 is likely to pose liquidity management challenges for Islamic banks.

Financing portfolio of DIBPL depicted healthy growth during FY14 as a number of new mid tier corporate clients were tapped; overall risk appetite remained moderate. Consumer portfolio continues to grow along with additions in product offering; however its share in overall financing has trended downwards. Financing activities are projected to continue to grow at an accelerated pace in the coming years; improving overall economic environment may facilitate the bank in achieving these targets. Asset quality indicators have so far remained sound; quality of fresh financing will be tested over time as the portfolio seasons.

In line with banking industry, profitability of DIBPL improved in FY14. Positive momentum in earnings is important to meet the minimum capital requirement through internal capital generation. The amount raised through subordinated debt, as an interim arrangement, is placed in a non-remunerative account with the State Bank of Pakistan (SBP).

For further information on this rating announcement, please contact the undersigned (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 604) at 92-21-35311861 or fax to 92-21-35311873.

Javed Callea

Applicable Rating Criteria: PRIMER - Commercial Banks (December 2001)

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 2015 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