JCR-VIS reaffirms ratings of Oman International Bank Pakistan Branches

Karachi: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Oman International Bank S.A.O.G. – Pakistan Branches (OIBP) at ‘BBB/A-2’ (Triple B/A-Two) with a ‘Stable’ Outlook.

Ratings draw comfort from the financial strength of Oman International Bank S.A.O.G (OIB), rated BBB+, by an international rating agency. OIBP has to maintain minimum capital in line with regulatory requirement of locally incorporated banks. However, the State Bank of Pakistan has granted permission to OIBP to continue its operations with paid up capital of Rs. 3b till end-2011.

Growth in gross advances portfolio of the bank has picked pace in the past six months. Given the continuity of high credit risk in the economy, underwriting standards need to be strengthened. Risk profile of fresh lending will be closely monitored by JCR-VIS. Present level of net NPLs is deemed manageable in context of loss absorption capacity of the bank. Liquidity profile of the bank remains stressed as capital of bank deployed with SBP is not available for business requirements. Moreover, deposit access is limited and the current deposit base features concentration. Liquidity profile of the bank is to some extent supported by sanctioned funding line of USD5m from the head office.

Loss was reported by OIBP for 2010. There has been a declining trend in losses; though further widening in spreads and development of ancillary sources of income is warranted to achieve profitable operations. The management has initiated steps to grow non-fund based income. There has been some turnover at the position of Country Manager and latest appointment has taken place in December 2010 only.

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