HBLP provides operational, management and financial support to HBLSL. Habib Bank Limited’s Sri Lanka branch (“HBLSL”) started its operations in 1951 as the first foreign branch of HBLP. Support from Habib Bank Limited of Pakistan (rated Caa1 by Moody’s & AAA by VIS Credit Rating Company Limited) Habib Bank Limited of Pakistan (“HBLP”) is the largest commercial bank in Pakistan with a market share of about 14% in terms of the share of customer deposits, as in Jul-20. The outlook may be revised to ‘Negative’ in case of sharp deterioration in asset quality and profitability indicators. The outlook may be revised to ‘Positive’ in case of a sharp improvement in the earnings profile as portfolio expands, while keeping the asset quality under control. ICRA Lanka believes that HBLSL will continue to benefit from its support through HBLP. The rating, also, takes cognizance of its small scale and franchise, geographically concentrated presence, a highly competitive business environment, and its concentrated deposit and advances profiles. The rating takes note of HBLSL’s comfortable capitalization profile with a Tier I capital ratio and Capital Adequacy Ratio (“CAR”) of 145.89% and 147.72%, respectively in Jun-20, as compared to the regulatory requirement of 8.00% and 11.50%, healthy funding profile with a gearing (total debt including deposits/net worth) of 0.46 times in Jun-20 and healthy liquidity with a positive short-term cumulative asset and liability mismatch of 25.73% (in less than 1 year bucket).įurther, ICRA Lanka notes HBLSL’s moderate profitability profile with a return on average assets of 0.36% in CY2019 and 1.11% for H1CY2020 and weak asset quality with gross and net NPA of 8.19% and 0.91%, respectively, as in Jun-20. HBLP is the largest commercial bank in Pakistan with, market share of around 14% in terms of the total deposit base, as of Jul-20.
The rating factors in the financial, managerial and operational support provided by Habib Bank Limited Pakistan (HBLP rated Caa1/NP by Moody’s) to its Sri Lankan branch operations.
ICRA Lanka Limited has assigned the issuer rating of A+ (Pronounced SL A plus) with a Stable outlook to Habib Bank Limited’s Sri Lanka branch (HBLSL or the Bank).