Press Release

JCR-VIS reaffirms ratings of Zarai Taraqiati Bank Limited at AAA/A-1+



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Karachi, June 30, 2009: JCR-VIS Credit Rating Company Limited has reaffirmed the credit ratings of Zarai Taraqiati Bank Limited (ZTBL) at ‘AAA/A-1+’ (Triple A / A-One Plus) with ‘Stable’ outlook. The ‘AAA/A-1+’ ratings of ZTBL are based on the federal government guarantee for timely repayment of credit lines obtained from the State Bank of Pakistan (SBP). The guarantee covers the principal amount of the lines together with profit payable in arrears. The safety of deposits mobilized by ZTBL has also been guaranteed by the Government of Pakistan (GoP) under the Banks’ (Nationalization) Act 1974.

Over the years, the bank’s focus had remained on lending operations which were largely funded through SBP credit lines while deposits formed a very small portion of the total funding mix. There is however renewed focus on deposit mobilization, which is to be complemented by the bank’s efforts on improving the technological infrastructure as part of the overall organizational revamping strategy. Furthermore, the bank’s efforts towards resource mobilization through multilateral arrangements would also diversify its funding sources. Other initiatives include facilitation of farmers in purchase of agri-inputs through a subsidiary.

JCR-VIS has reaffirmed the standalone ratings at ‘B+/B’ (Single B Plus / Single B) with a ‘Stable’ Outlook. The bank’s standalone ratings will be reviewed and may be positively influenced if the debt restructuring plan currently under negotiation is finalized, which entails partial conversion of existing debt into equity and long term interest free loan, while the remaining is to be re-paid over an agreed timeframe. Long term viability of the institution however remains contingent upon the bank’s ability to price loan products in a manner that the bank is able to cover both its financial and administrative overheads.

For further information on this rating announcement, please contact the undersigned (Ext: 501) or Ms. Sabeen Saleem (Ext: 510) at 5311861-70 (10 lines) or fax to 5311872-3.

Safdar Kazi

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 not an NRSRO and its credit ratings are not NRSRO credit ratings.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 2009 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