Karachi, June 29, 2016: JCR-VIS Credit Rating Company Limited has reaffirmed the entity ratings of Pak Oman Investment Company Limited (POIC) at ‘AA+/A-1+’ (Double A Plus/A-One Plus) with a ‘Stable’ Outlook. The previous rating action was announced on June 30, 2015.
The credit ratings assigned to POIC take into account the joint venture shareholding structure of the company, equally held by the Government of Pakistan and the Sultanate of Oman. Standalone risk profile of the company is considered strong reflected by sound capitalization level and conservative risk appetite.
Core lending operations of the company gained momentum with gross advances increasing to Rs. 10.9b (2014: Rs. 10.0b) on account of a consolidation strategy undertaken by the management. However, portfolio quality needs continuous monitoring, going forward.
As with other DFIs, POIC operates on thin spreads which have remained largely unchanged during FY15. Profitability of the company was driven by higher realized capital gains on sale of securities coupled with some increase from volumetric growth in earning assets. In the backdrop of declining interest rate scenario, the company may need to effectively balance its cost of funding and return on assets in order to curtail pressure on spreads.
Equity base of the company is considered adequate with a high capital adequacy ratio, signifying considerable room for further business expansion. However, as per management, future business strategy is expected to remain cautious as POIC continues to follow a conservative risk stance. Liquid assets are considered adequate in relation to total deposits & borrowings with deposit profile featuring significant concentration.
For further information on this rating announcement, please contact the undersigned (Ext: 501) or Mr. Mohammed Khalid Ali (Ext: 508) at 35311861-70 or fax to 35311872-3.
JCR-VIS Entity Rating Criteria: Government Supported Entities (July 2002)
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