JCR-VIS Credit Rating Co Ltd. (JCR-VIS) has upgraded the entity ratings of Meezan Bank Limited (MBL) from ‘A+/A-1’ (Single A Plus /A-One) to ‘AA-/A-1’ (Double A Minus/A-One) with a ‘Stable’ Outlook. The medium to long-term rating had been on a ‘Positive’ Outlook since June 22, 2009.
With an additional 35 branches set up in 2009, the branch network of MBL has grown to 201. This has facilitated a broad based growth in deposits. Liquidity indicators have remained consistently strong while low cost of funds has also allowed the bank to generate healthy margins on its financing operations. The bank has been able to expand its branch network without placing significant stress on operational efficiency indicators.
Over the last year, growth in advances was undertaken at a cautious pace. The bulk of financing represents corporate sector exposure, while SME and consumer financing represent about 15% each. Going forward, the portfolio mix is expected to be maintained in line with current trends. The rate of delinquencies in the bank’s consumer portfolio compares very favorably to other industry participants in both the Car Ijarah and Home Financing products. New products in this segment are also on the anvil.
The overhaul of IT infrastructure is on-going with the implementation of core modules of T24 across the branch network targeted to be achieved by FY2011. Installation of ancillary applications and report generation tools may however require additional time. The sponsors of MBL have continued to exhibit their support towards the institution, with an equity injection of Rs. 1.7b made in FY09. Capital Adequacy Ratio of the bank is comfortably placed at 12.77%, indicating further room to grow.