PACRA Reaffirms Askari Bank’s Tier-II TFC Rating at AA

Islamabad: The Pakistan Credit Rating Agency Limited (PACRA) has reaffirmed the debt instrument rating of Askari Bank Limited’s Tier-II Term Finance Certificates (TFC-VII) at AA with a stable outlook. This decision reflects the bank’s robust ownership structure, which is significantly supported by its affiliation with the well-regarded Fauji Group conglomerate. The bank’s efforts to expand its international presence are evident in its strategic focus on new markets in Europe, Southeast Asia, and the Middle East, facilitated by its correspondent banking relationships across 72 countries.

According to The Pakistan Credit Rating Agency Limited, Askari Bank’s financial performance during the first nine months of the 2024 calendar year showed a notable increase in net markup income by approximately 7%, reaching PKR 43.2 billion compared to PKR 40.5 billion in the same period the previous year. This growth is attributed to a 27% increase in the bank’s investment book since December 2023, despite a 24% decline in advances due to the net retirement of short-term seasonal financing. The bank’s profit after tax remained relatively stable at PKR 14.0 billion, influenced by higher funding costs and increased operating expenses related to branch expansion, technology investments, and inflation effects.

The bank’s deposit base grew by 9% during the same period, reaching PKR 1.4 trillion, driven by a 14% increase in current account and savings account (CASA) deposits, which constituted 88% of total deposits by September 2024. Additionally, the bank’s capital adequacy ratio improved to 21.19%, reflecting its strong capitalization. The management is actively pursuing initiatives to enhance business sustainability, with a particular emphasis on expanding Islamic banking and Shariah-compliant product offerings. The ratings are contingent upon the bank’s ability to maintain its competitive position, manage funding costs prudently, and sustain asset quality.

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