KARACHI: The Pakistan Credit Rating Agency (PACRA) has upgraded the Entity as well as Debt Instrument ratings of Bank Alfalah Limited, said a press release issued here on Thursday.

The Bank's Long Term Entity Rating was said to be upgraded to AA+ (Double A Plus) from the previous rating of AA (Double A), while its Long Term Debt Instrument Rating was upgraded to AA (Double A) from the previous rating of AA- (Double A Minus).

The outlook has been changed from Positive to Stable in both cases, said the concerned authorities mentioning that ratings reflect the relative positioning of the Bank Alfalah, among large banks of the country.

The Bank was claimed to have a stronger position in advances - sustained by fresh deployments whereas the deposit system share witnessed dilution as the Bank embarked upon a strategy to sustainably rationalize its cost of funding with enduring focus on low cost deposits.

Consequently, BAFL's cost of fund is comparable to some of the large banks, said the officials reiterating that Bank Alfalah enjoys an extended outreach across the country which has augmented its deposit base.

The operating cost structure was said to had also improved on a Year-on-Year basis, on account of cost rationalization and that its asset quality had sustained over the last three years on account of prudent risk management.

Going forward, Bank Alfalah is focused on consolidating its position further by introducing technology-led banking products, focusing on SME and transactional banking, and shifting from conventional to the digital banking model.

The assigned ratings also recognize the demonstrated support of Abu Dhabi group (ADG) as a key factor.