Bank Alfalah Limited (BAFL) has been awarded initial entity ratings of ‘AA+/A-1+’ (Double A Plus/A-One Plus) by JCR-VIS Credit Rating Company Limited (JCR-VIS), representing outlook of assigned ratings as ‘Stable’.
These allocated ratings show the spread-out banking operations, strong risk profile, fit sponsors and current market presence. Bank Alfalah has showed significant improvement in different performance areas such as liquidity, asset quality, profitability and capitalization. The bank is majorly owned by Abu Dhabi Group (ADG), including some of the renowned members of ruling family and businessman of UAE. And it is the 5th largest private sector bank of Pakistan having a market share of 5.8% in the domestic deposits, as of September, 2016. It’s has a significant overseas presence too including Bangladesh, Afghanistan and Bahrain representing 6.4% of the total assets. The bank also relishes a significant shariah-footprint having 16.4% part to the total assets. Also, it has an extensive product folio with key areas such as SME lending, digital banking and transaction banking.
Most the bank’s assets include revelation towards public sector. These represents nearly advances and investments of the total assets. Whereas, the bank’s loan book is one of the important lending operation, impacting the SME and consumer lending tremendously. Inclusively, the credit risk profile of Bank Alfalah has enhanced with decrease in infection ration (9M16: 5.4%, 2012: 8.9%), better-quality provisioning exposure (9M16: 87.5%, 2012: 65.0%) and a greater part of exposure of public sector in advances portfolio.
Bank Alfalah’s market share has been deliberately brought down for the time being to better deposit profile and accomplish spreads in low interest rate situation whereas the background shows tough opposition for lending rates. The bank’s liquidity profile has shown upgrading as given by a varied deposit mix and enhancement in liquid assets. The deposit mix’s segregation includes portion of non-remunerative current account, which is the top-most in peers whereas the depositor levels of concentration are improving. The indicators for capitalization have also reinforced with time as the equity base has increased owing to retained profits, expecting Tier-1 and completely CAR have increased.
PAT (Profit after Tax) increased 3.7% because of lower provisions and greater gains of capital. Higher efficiency ratio regarding peers is a purpose of extra products and services given by the Bank. Moving ahead, high returns’ PIBs shown in investment portfolio and a fall in the costs of deposit promises good for the overall profitability of the Bank.
Bank Alfalah is 5th largest private bank and one of the largest Islamic Banking services provider. It has over 650 branches available in over 200 cities.
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