Press Release

JCR-VIS Reaffirms Entity Ratings of Samba Bank Limited

Karachi, June 28, 2013: JCR-VIS Credit Rating Company Ltd has reaffirmed the entity ratings of Samba Bank Limited (SBL) at ‘AA-/A-1’ (Double A Minus/A-One). Outlook on the assigned ratings is ‘Stable’.

Ratings incorporate the strength of the bank’s sponsor, Samba Financial Group (SFG). Financial risk profile of SFG has remained robust. In addition to transfer of knowledge and sharing of services with SBL, support from SFG has been evident through multiple equity injections since acquisition, including the recent advance against issuance of right shares. The same has facilitated the bank in meeting minimum capital requirement, set by the regulator.

Lending activities of the bank remained subdued during the out-going year, with focus maintained on top-tier clients. However, market for these clients has become increasingly competitive translating into lower spreads for the bank. Moreover, decline in policy rate also affected profitability, as operational performance of the bank depicted weakening in FY12 as compared to prior year. Greater breadth and scale in operational activities is required to achieve consistent growth in earnings.

Growth in deposits was below target in FY12; several initiatives are in the pipeline to achieve deposit target for FY13. Existing branch network is planned to be leveraged further to achieve growth in deposits. Deposit base of the bank has yet to achieve stability; reduction in deposits was witnessed in 1Q13. Concentration in deposit base remains high. Given that lending activities are projected to grow at a limited scale only, the bank is expected to continue to hold sizeable liquid reserves on its balance sheet, which acts as a mitigant to the high concentration levels in deposit mix.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 604) at 35311861-70 or fax to 35311873.

Jamal Abbas Zaidi
Deputy CEO

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited VIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2013 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.

JCR-VIS Credit Rating Company Limited