Press Release

VIS Reaffirms Entity Ratings of Samba Bank Limited

Karachi, June 24, 2019: VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings of Samba Bank Limited (SBL) at ‘AA/A-1’ (Double A/A-One). Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on June 22, 2018. The long term rating of ‘AA’ signifies high credit quality; protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. The short term rating of ‘A-1’ signifies high certainty of timely payment; liquidity factors are excellent and supported by good fundamental protection factors. Risk factors are minor.

The assigned ratings of SBL are underpinned by sound profile of its sponsor, Samba Financial Group (SFG). The Samba Financial Group (SFG) is one of the largest banking groups in Kingdom of Saudi Arabia (KSA). SFG has been assigned the Long-Term Issuer Default Rating (IDRs) of ‘A-’ with a stable outlook by an International credit rating agency. Ratings also incorporate adequate financial risk profile of the bank on a standalone basis as indicated by its sound capitalization indicators and asset quality indicators coupled with growth in advances and operating profitability in 2018.

Gross advances of SBL witnessed healthy growth of 31.5% to increase to Rs. 55.9b (2017: Rs. 42.5b) at end-2018. Resultantly, overall market share of the bank in advances depicted an increase to 0.71% (2017: 0.65%). Current market share of the bank indicates room for growth as it is considered to be on the lower side vis-à-vis peers. Gross and net infection ratios of the bank remain sound in comparison to the peers.

Overall liquidity profile is considered manageable in view of adequate liquid assets in relation to outstanding liabilities. However, depositor concentration has increased, while liquidity buffer has decreased on timeline basis. Capitalization indicators of the bank remain sound with CAR depicting sizeable cushion over the regulatory requirement.

Net Interest Income improved on back of growth in advances coupled with higher returns on financing. Moreover, lower mobilization of borrowings also resulted in slight decrease in markup expenses. Higher growth in recurring income vis-à-vis the expense base translated into higher operating profitability. Management expects operating profitability to increase in future in view of the rising interest rate scenario.

For further information on this rating announcement, please contact the undersigned (Ext: 201) or Narendar Shankar Lal (Ext: 203) at 021-35311861-71 or fax to 021-35311872-3.

Javed Callea

Applicable rating criterion: Commercial Banks Methodology - March 2018

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 2019 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

VIS Credit Rating Company Limited