Press Release

Entity Ratings of Security Investment Bank Limited

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Karachi, July 7, 2015: JCR-VIS Credit Rating Company Limited has revised the long term entity rating of Security Investment Bank Limited (SIBL) from ‘A-’ (Single A Minus) to ‘BBB+’ (Triple B Plus); short term rating has been maintained at ‘A-2’ (A-Two). Outlook on the assigned rating is Stable. The previous rating action was announced on August 8, 2014.

SIBL’s equity continues to remain short of the minimum capital requirement (MCR) of Rs. 1.0b stipulated for Non-Banking Finance Companies (NBFCs) undertaking business of investment finance; the shortfall was reported at Rs. 480.6m at end-1QFY15. NBFCs reform committee had proposed various revisions in the regulatory framework for NBFCs including lower MCR; further developments in lieu of the regulatory regime are awaited.

Operational activities of the bank have continued to scale down; financing is extended only to associated companies with balances outstanding since long. With off-loading of PIBs during FY14, there was a notable change in the investment mix while investment portfolio also declined. Exposure in equities and equity related mutual funds continues to remain limited. Profitability during FY14 was reported higher mainly on account of final dividend received from the winding up of SIBL Exchange Company (Pvt.) Ltd; a non-recurring item. Profit levels are expected to normalize in the on-going year. Given that asset base is mainly funded by equity, overall liquidity profile of the institution is considered sound. As such, there are no major borrowings outstanding which may trigger liquidity call.

As per the recently developed business plan, the management envisages business expansion in the coming years. Counterparty assessment tools will need to be developed to undertake the planned expansion in credit activities along with induction of personnel with required skill set. Given the challenges faced by the overall NBFCs sector, successful execution of the business plan would be tested over time.

For further information on this rating announcement, please contact the undersigned (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 506) at 021-35311861-70 or fax to 021-35311873.

Javed Callea

Applicable Rating Criteria: Non-Banking Financial Companies (March 2005)

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.

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