Press Release

JCR-VIS Reaffirms Ratings of Summit Bank Limited

Karachi, June 30, 2015: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Summit Bank Limited (SBL) at ‘A/A-1’ (Single A/A-One). Rating of the outstanding TFC-1 has also been reaffirmed at ‘A(SO)’ (Single A (Structured Obligation)). Outlook on the outstanding ratings is ‘Stable’. The previous rating action was announced on December 26, 2014.

The ratings assigned to SBL incorporate demonstrated financial support of the bank’s major sponsor Suroor Investments Limited by way of injection of Rs. 7b as advance share subscription money, which has allowed the bank to achieve compliance with the minimum capital requirement; at end 1Q15, CAR was reported at 11%. In the backdrop of increased capital requirements under Basel III, the capital cushion available needs to be strengthened.

Asset quality indicators have shown improvement on a timeline basis in view of reduction in NPLs; moreover, sovereign exposures by way of investments and advances represented 28% of the asset base. The bank has projected to achieve sizeable reduction in net infection over time and JCR-VIS will continue to track progress against the same.

Liquid assets in relation to deposits & borrowings have declined on a timeline basis, on account of growth in lending activities. Improving deposit mix and lower depositor concentration levels of the bank provide support to liquidity assessment of the institution.

During 2014, operating loss of the bank has reduced on a quarter on quarter basis on account of reduction in deposit cost, increase in mark-up income due to high yielding PIBs, decrease in NPLs and growth in fee commission income. Capital gains realized during the year 2014 enabled the bank to achieve profitable results. Since the bank has already booked gains on sale of a portion of higher yielding PIBs, redeployment of funds at prevailing interest rates is likely to impact markup income. Enhanced focus on recoveries is being pursued for curtailment of provisioning expense to reduce the drag on the bank’s bottom line. JCR-VIS will continue to track progress against the budgeted targets communicated by the management.

For further information on this rating announcement, please contact the undersigned (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 604) at (+92-21) 35311861-70 or fax to (+92-21) 35311872-3.

Javed Callea

Applicable rating criterion: PRIMER - Commercial Banks (December 2001)
Rating the Issue (Sept 2014)

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 2015 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