VIS reaffirms ratings of NBP

KARACHI: VIS Credit Rating Company Limited has reaffirmed the entity ratings of National Bank of Pakistan (NBP) at triple A/A-One Plus.

The long-term rating of "AAA" signifies highest credit quality; risk factors are negligible being only slightly more than for risk-free Government of Pakistan's debt. The short-term rating of "A-1+" signifies highest certainty of timely payment; short-term liquidity, including internal operating factors and 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 29, 2018, said a press release on Friday.

Assigned ratings are driven by the bank's systemic importance, ownership structure with majority shares (75.6%) held by the Government of Pakistan, and NBP's role in handling treasury transactions for the Government of Pakistan as an agent to the State Bank of Pakistan.

The rating also reflects the bank's positioning as the largest public sector bank in the country having market share of 15.0% (2017: 13.2%) in domestic deposits and 12.4% share of gross advances. Current ratings are also supported by the bank's improved operating profitability and adequate liquidity profile.

Capitalization indicators of the bank remain healthy; the same may come under pressure in case of unfavorable outcome of the litigation related to legacy pension case, and will require further strengthening to remain commensurate with the assigned ratings benchmarks.