The Pakistan Credit Rating Agency (Pacra) has maintained the long-term and short-term entity ratings of Bank Alfalah Limited (BAL) at "AA" (Double A) and "A1+" (A one plus) respectively. The rating for each of the three subordinated TFCs has been maintained at "AA-" (Double A minus).
Meanwhile, Pacra has assigned the same rating to the proposed fourth unsecured subordinated TFC issue of 2,500 million rupees. These ratings denote a very low expectation of credit risk emanating from very strong capacity for timely payment of financial commitments.
The ratings reflect the bank's demonstrated ability of achieving growth emanating from its fast expanding outreach and an established franchise value, though lately, the pace of growth has slowed down. At the same time, BAL has achieved a higher degree of diversity in its loan book, implying relatively low credit risk. The subdued profitability of the bank owes itself to the low-margin high-volume business philosophy of the management.
The stressed capital structure of the bank is unlikely to change due to the bank's maintained growth stance, though the management has demonstrated the capacity to raise its capital, both tier 1 and 2, to cater for its growth targets.-PR
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