VIS Reaffirms Entity Ratings of Pak Brunei Investment Company Limited - Press Release issued by VIS Credit Rating Company Limited.

Karachi -- June 29, 2020 (PPI-OT)

Following is the text of press release issued by VIS Credit Rating Company Limited

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VIS Credit Rating Company Limited has reaffirmed the entity ratings of Pak Brunei Investment Company Limited (PBIC) at 'AA+/A-1+' (Double A Plus/A-One Plus). The long-term rating of 'AA+' signifies high credit quality, protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. The short-term rating of 'A-1+' signifies highest certainty of timely payment; short-term liquidity, including internal operating factors and/ or access to alternative sources of funds, is outstanding and safety is just below risk-free Government of Pakistan's short-term obligations. Outlook on the assigned ratings is 'Stable'. The previous rating action was announced on June 26, 2019.

The assigned ratings incorporate PBIC's sound capitalization and liquidity indicators. Asset quality indicators have largely been maintained and remain strong reflecting sound risk and control infrastructure. Provisioning coverage, though sound, needs to be further strengthened in alignment with outstanding rating. Ratings also take into account elevated exposure to credit risk due to significant impact of Covid-19 on already weak macroeconomic indicators. Profitability profile has largely been maintained but is expected to improve in 2020 due to higher capital gains. Ratings continue to derive strength from strong sponsor profile of Government of Pakistan and Brunei Investment Agency.

During the period under review, PBIC pursued a conservative lending strategy given the challenging macroeconomic environment. Going forward, the management plans to pursue a consolidation strategy given the challenging operating environment. Resultantly, advances portfolio is expected to witness limited growth in 2020. Regulatory relief measures undertaken by SBP to promote financial stability, ensure continued credit supply to the economy and maintain confidence in the financial system have been received positively and are expected to delay the impact of prevailing headwinds on portfolio asset quality indicators.

However, exposure of...