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Lahore, December 19, 2019 (PPI-OT): The ratings reflect Soneri Bank’s maintained business profile as reflected by intact system share (end-Sep19: 1.8%, end-Dec18: 1.8%). The bank’s funding base comprise of deposits and borrowings. Mark-up Income witnessed substantial jump attributable to hike in asset yield and higher earning asset on a period on period basis. The net revenue also grew considerably. Fee and commission based income remained largely same while realized loss on securities and muted economy negated this positive impact. Spread also witnessed slight uptick (end-Sep19: 2.5%; end-Dec18: 2.4%). Reversals in provisioning further supported the overall profitability.
Sustainability in NIMR, continued enhancement in non-fund based exposure and sustainable growth in fee income is important for future years. Current deposits witnessed a growth of ~6% in 9MCY19. Deposits recorded good growth however tilted towards term deposits; CASA ratio witnessed meagre decline. Non-Performing Loans shrank which led to improvement in impairment ratio. The Investment book has expanded significantly and fuelled by borrowings from financial institution. Going forward, the strategy is to mobilize low cost deposits. The bank’s CET-I stands at 10.18% as at end-Sep19. Total CAR stands at 15.2%. The bank has issued additional Tier-1 TFC (PKR 4,000mln) in CY18, which enhanced its capital base, thereby boosting its lending capacity.
The rating is a function of bank’s ability to maintain its market position in the banking industry while strengthening its overall risk profile. Bringing efficiency in operational structure is important for long term growth. In the comparative landscape, adding granularity to deposits and advances is critical. Meanwhile, a sustainable increase in system share and consequent profitability would be ratings positive.
For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com