JCR-VIS Credit Rating Company Limited, (JCR-VIS) has upgraded the entity ratings of Burj Bank Limited (formerly Dawood Islamic Bank Limited) from 'A-/A-2' (Single A Minus/A-Two Minus) with a 'stable' outlook. In line with sponsors' commitment to inject fresh capital into the institution by June 30th, 2011, paid-up capital of the bank (net of losses) has been enhanced to Rs 6billion.
Shareholding pattern has changed post-rights issues, as expected. Ratings assigned to BBL incorporate the strength arising from Islamic Corporation for Development of the Private Sector (ICD), now one of the largest shareholders and also the key driver of future business strategy.
While the bank is still short of the regulatory capital requirement of Rs 7billion that was required to be met with by the end of December 2010; capital adequacy ratio is comfortably higher than the regulatory minimum, providing the bank with significant potential to grow without compromising its risk profile. The bank has also received regulatory relaxation in this respect.
In a bid to reposition itself under a new brand identity and to develop its franchise value, the bank has changed its name recently. Profitability indicators have showcased improvement vis-à-vis FY10, with the bank posting net profit for the first time in the last two and a half years, with significant impetus received from reduced loan losses. Deposit volumes witnessed growth during HFY11, however, deposit cost remains on the higher side. Developing depositors' profile both in terms of cost effectiveness and mix will continue to be tracked by JCR-VIS.-PR
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