The Pakistan Credit Rating Agency (PACRA) has assigned ‘Positive Outlook’ to the long-term and short-term entity ratings of ‘AA-’ (Double A minus) and ‘A1+’ (A one plus), respectively, of The Bank of Punjab. The ratings denote a very low expectation of credit risk and indicate very strong capacity for timely payment of financial commitments. The ratings recognize improvement in the risk absorption capacity of the bank; the bank has achieved compliance with capital adequacy ratio (end-Dec14 CAR: 10.2%). This is attributed to a sizeable reduction in the non-performing loans inherited by the current management; recoveries being the cornerstone of the bank’s strategy. In addition, there has been an appreciable uptick in the bank’s profitability, supplementing its equity base. Moreover, continued support from the sponsors - The Government of Punjab (GoPb) - provides

requisite fiscal space; letter of comfort against provisioning for major infected exposures has been extended till 2018. The association with GoPb has benefitted the bank in terms of fresh capital injection, subordinate debt and a sustainable deposit base. The bank envisages growth in advances wherein the criteria is higher margins with sustained risk profile. Meanwhile, expansion in deposit base with low cost focus, while attracting a wide customer range, is on cards.

The Positive Outlook captures improving financial risk profile of the bank, mainly emanating from compliance with capital adequacy requirements and healthy profitability trend. The management has chalked out a comprehensive plan to augment these trends further. Meanwhile, improvement in asset quality and upholding better governance standards remain imperative.