Pakistan Credit Rating Agency Limited (Pacra) has maintained the long-term and short-term ratings of the Bank of Punjab (BoP) at "AA" (Double A) and "A1+" (A One Plus), respectively.
Meanwhile, Pacra has assigned a positive outlook to these ratings. According to a Pacra's spokesman here on Thursday, the ratings denote a very low expectation of credit risk emanating from a very strong capacity for timely payment of financial commitments. The ratings reflect BoP's sustained improving performance, sound asset quality and strong risk absorption capacity emanating from a robust capital structure.
The bank's inherent advantage due to its regional brand equity and extensive branch network in Punjab province, make it well positioned to capitalise on these inherent strengths despite the intensifying competition. Recognising these trends and the likely beneficial implications of the proposed merger with Punjab Provincial Cooperative Bank Limited (PPCBL), the outlook on these ratings is positive.
He said that BoP's ratings are dependent on effective execution of the management's strategy to achieve growth, strengthen risk management systems and implement the core IT system in time. "The current president has been instrumental in the turnaround of the bank. His continued association with the bank in the medium-term till the development of a cohesive and strong management team and a sustainable risk management culture across the bank is a critical rating factor," he added.
According to him, Pacra also takes this opportunity to state that it has duly reviewed the data and information provided by the BoP's management relating to certain specific loan exposures and implications regarding risk management systems, recently reported in the media. While strengthening the risk management framework continues to remain a key rating driver, the strong risk absorption capacity of the bank provides cushion against any unforeseen losses.
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