Pakistan Credit Rating Agency revises ratings of First Women Bank Limited

Lahore, June 30, 2014 (PPI-OT): The Pakistan Credit Rating Agency (PACRA) has downgraded the long-term entity rating of First Women Bank Limited “BBB+” (Triple B Plus) [previous: A-], while maintaining short-term rating at “A2″ (A Two). The ratings indicate that there is currently a low expectation of credit risk.

The ratings reflect majority ownership of the bank by the Government of Pakistan (GoP). A distinct capital framework has been finalized for the bank by SBP. This requires minimum capital of PKR 3,000mln.

To meet shortfall of ~PKR 1,500mln, GoP is supporting the bank through fresh capital injection; PKR 500mln has been injected while the balance has budgetary approvals. This is also resulting in gradual increase in GoP’s shareholding.

On standalone basis, the bank’s performance has significantly deteriorated in the absence of a focused business strategy and weak credit culture. Operating costs continued to rise despite consistent decline in earnings.

Substantial increase in non-performing loans has magnified the loss. FWBL’s size and limited outreach pose constraints, also reflected in declining deposit base. The ratings are dependent upon the bank’s ability in holding fall in asset quality and performance.

Lately Ms. Tahira Raza has been appointed as the bank’s president. She is a seasoned banker carrying a good experience profile, particularly from the perspective of FWBL’s challenges. Her success in improving bank’s credit profile and capitalizing on GoP’s renewed commitment in formulating a workable business strategy for the bank would be critical. Meanwhile, holding and building up a good team is important.

For more information, contact:
Hammad Rashid
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

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