DECEMBER 2017 The Pakistan Credit Rating Agency Limited NEW [DEC-17] PREVIOUS [JUN-17] REPORT CONTENTS 1. RATING ANALYSES Long-Term AA- AA- 2. FINANCIAL INFORMATION Short-Term A1+ A1+ 3. RATING SCALE Outlook Stable Stable 4. REGULATORY AND SUPPLEMENTARY DISCLOSURE JS BANK LIMITED RATING REPORT
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JS BANK LIMITED EPORT - PACRApacra.com.pk/uploads/summary_report/20171220100306... · JS Bank Limited (JSBL), incorporated in March 2006, commenced its banking operations on December
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DECEMBER 2017
The Pakistan Credit Rating Agency Limited
NEW [DEC-17]
PREVIOUS [JUN-17]
REPORT CONTENTS
1. RATING ANALYSES
Long-Term AA- AA-
2. FINANCIAL INFORMATION
Short-Term A1+ A1+
3. RATING SCALE
Outlook Stable Stable
4. REGULATORY AND SUPPLEMENTARY
DISCLOSURE
JS BANK LIMITED
RATING REPORT
The Pakistan Credit Rating Agency Limited
BANKING
JS BANK LIMITED
December 2017 www.pacra.com
Ratings are dependent on JS Bank's ability
to maintain its growth continuously to
establish itself in the medium-sized
banking space of Pakistan. Meanwhile,
upholding asset quality, maintaining
system share in terms of advances and
deposits, adding diversity to income
stream, sound CAR and strong governance
framework are critical.
KEY RATING DRIVERS
Profile &Ownership
JS Bank Limited (JSBL), incorporated in March 2006, commenced its banking operations
on December 30, 2006; operates with network of 307 branches.
JSBL is a subsidiary (~70%) of Jahangir Siddiqui & Company Limited (JSCL). JSCL also
holds ~97% of preference shares issued in Feb-14.
Governance & Management
The board comprises nine members including CEO, out of which five are non-executive
directors including the chairman and three are independent directors.
President & CEO is a non-elected executive director.
Mr. Ali Jehangir Siddiqui, Non-executive director - JSCL, was elected as Chairman of the
board in March 2016.
Current president & CEO Mr. Khalid Imran, possess substantial and well-rounded
prosfessional experience of four decades.
Mr. Basir Shamsie has been appointed as the deputy CEO in May, 2017. He possess work
experience of three decades, primarily in the banking sector.
Risk Management and Asset Quality During 3QCY17, earning assets grew by ~65%; a facet of increased investments in
government securities; concentration in sectoral mix was maintained in advances, with top
LONG TERM RATINGS SHORT TERM RATINGS AAA Highest credit quality. Lowest expectation of credit risk.
Indicate exceptionally strong capacity for timely payment of financial commitments.
A1+: The highest capacity for timely repayment.
A1:. A strong capacity for timely repayment.
A2: A satisfactory capacity for timely repayment. This may be susceptible to adverse changes in business, economic, or financial conditions.
A3: An adequate capacity for timely repayment. Such capacity is susceptible to adverse changes in business, economic, or financial conditions.
B: The capacity for timely repayment is more susceptible to adverse changes in business, economic, or financial conditions.
C: An inadequate capacity to ensure timely repayment.
AA+ AA AA-
Very high credit quality. Very low expectation of credit risk. Indicate very strong capacity for timely payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.
A+ A A-
High credit quality. Low expectation of credit risk. The capacity for timely payment of financial commitments is considered strong. This capacity may, nevertheless, be vulnerable to changes in circumstances or in economic conditions.
BBB+ BBB BBB-
Good credit quality. Currently a low expectation of credit risk. The capacity for timely payment of financial commitments is considered adequate, but adverse changes in circumstances and in economic conditions are more likely to impair this capacity.
BB+ BB BB-
Moderate risk. Possibility of credit risk developing. There is a possibility of credit risk developing, particularly as a result of adverse economic or business changes over time; however, business or financial alternatives may be available to allow financial commitments to be met.
B+ B B-
High credit risk. A limited margin of safety remains against credit risk. Financial commitments are currently being met; however, capacity for continued payment is contingent upon a sustained, favorable business and economic environment.
CCC CC C
Very high credit risk. Substantial credit risk “CCC” Default is a real possibility. Capacity for meeting financial commitments is solely reliant upon sustained, favorable business or economic developments. “CC” Rating indicates that default of some kind appears probable. “C” Ratings signal imminent default.
D Obligations are currently in default. Outlook (Stable, Positive, Negative, Developing) Indicates the potential and direction of a rating over the intermediate term in response to trends in economic and/or fundamental business/financial conditions. It is not necessarily a precursor to a rating change. ‘Stable’ outlook means a rating is not likely to change. ‘Positive’ means it may be raised. ‘Negative’ means it may be lowered. Where the trends have conflicting elements, the outlook may be described as ‘Developing’.
Suspension It is not possible to update an opinion due to lack of requisite information. Opinion should be resumed in foreseeable future. However, if this does not happen within six (6) months, the rating should be considered withdrawn.
Disclaimer: PACRA's ratings are an assessment of the credit standing of entities/issue in Pakistan. They do not take into account the potential transfer / convertibility risk that may exist for foreign currency creditors. PACRA's opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security’s market price or suitability for a particular investor.
Withdrawn A rating is withdrawn on a) termination of rating mandate, b) cessation of underlying entity, c) the debt instrument is redeemed, d) the rating remains suspended for six months, e) the entity/issuer defaults., or/and f) PACRA finds it impractical to surveill the opinion due to lack of requisite information
Credit rating reflects forward-looking opinion on credit worthiness of underlying entity or instrument; more specifically it covers relative ability to honor financial obligations. The primary factor being captured on the rating scale is relative likelihood of default.
Rating Watch Alerts to the possibility of a rating change subsequent to, or in anticipation of, a) some material identifiable event and/or b) deviation from expected trend. But it does not mean that a rating change is inevitable. A watch should be resolved within foreseeable future, but may continue if underlying circumstances are not settled. Rating Watch may accompany Outlook of the respective opinion.
Rated Entity
Name of Issuer JS Bank Limited
Name of Issue JS Bank Limited | TFC
Sector Banking
Type of Relationship Solicited
Purpose of the Rating Regulatory Requirement
Independent Risk Assessment
Rating History Dissemination Date Long Term Short Term Outlook Action
20-Dec-16 AA- A1+ Stable Maintain
22-Jun-17 AA- A1+ Stable Maintain
20-Oct-16 AA- A1+ Stable Upgrade
22-Jun-16 A+ A1+ Positive Maintain
22-Jun-15 A+ A1+ Stable Maintain
13-Mar-15 A+ A1+ Stable Upgrade
Name of Instrument Size of Issue Tenor Security
Instruments Detail TFCII (Subordinated, Privately Placed) PKR 3,000mln 7 years Unsecured
Amortization Schedule See Annexure I & Annexure II
Related Criteria and Research
Methodology: Bank Rating Methodology [2017]
Debt Instruments Rating Methodology [Jun-17]
Sector Research Banking Sector - Viewpoint | Jun-17
Total 100% 3,000,000,000 283,348,202 3,283,348,202
Base Rate defined as the average rate "Ask Side" of the 6 (six) month Karachi Interbank Offered Rate ("KIBOR") prevailing 1 (one) Business Day prior to the Issue Date and thereafter 1
(one) Business Day prior to each Redemption Date
6 Months KIBOR Ask Rate as of December 13, 2016 6.13%