Js Bank

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Credit Rating Report|
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JS Bank|
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Submitted By: M. Jehangir Khan
Abdul Mannan
Submitted To: Dr. Nawazish Mirza
Dr. Ayesha Afzal
Dec 2012|

RATING RATIONALE
ASSESSMENT
| New| Previous|
Entity| | |
Long term| A+| A|
Short Term| A1| A1|
The rating shows a fine and sound financial performance of the bank emanating from increasing bank’s profitability and liquidity and the sound capital adequacy values. Also the growing network of bank with the increase technological up gradations are adding a lot to the sound operations of JS bank. Obviously with the growing number of branch network the bank seems to face certain risk in future but they need to cope with the challenges to be faced in near future. Effective utilization of funds and giving out quality loans and catering with the NPL changes must be the prime focus of the bank. Financial Data| PKR (mln)|

| 2012| 2011| 2010|
Total Assets| 70,949| 53,920| 39,383|
Equity| 8,247| 7,505| 5,821|
Net Income| 742.5| 361.6| -407.5|
ROA %| 1.4%| 0.7%| -1.0%|
ROE%| 12.0%| 4.8%| -7.0%|
Equity/Total Assets %| 11.6%| 13.9%| 14.8%|
SBP CAR| 15.4%| 16.1%| 17.6%|
We Assign A+ to long term ratings and A1 to short term ratings because the bank’s indicates strong capacity for timely repayment of financial commitments. This capacity is not significantly vulnerable to foreseeable events. The ratings are dependent upon the management control that is essential to deal with the certain risks in the market. Prudent control over the network including technological updates and managing the key business personnel’s would always be important for the banking decisions. As a bank on small scale, maintaining and improving the reputation and asset quality would always remain challenging for the bank.

Performance of the bank is in term of profitability improved the main reason is it sizable growth, increase in total earning assets, and improvement in spread and contribution of higher non-fund based income mainly due to trade related activities. However the cost structure remains same due to network expansion. The NPLs is going upward in recent period of time because of recognition of single largest exposure (Azgard Group) with very little provisioning against it.

1. Profile & Background:

* Highly Experienced Management Staff
* Network Expansion
1.1. JS bank started with its operations as a merger of Jahangir Sadiqque Investment Bank Limited and commercial banking operations of American express bank Ltd. On the whole JS bank commenced its operations fully in Pakistan on December 30, 2006. 1.2. The bank provides different types of services being a commercial bank. It offers retail banking, consumer banking, wealth management, investment banking and treasury services. 1.3. The branch network has grown from 147 to 153 in 2012 and it is listed on Karachi Stock Exchange. Currently the bank is operating only in Pakistan. JS bank is itself a subsidiary of Jahangir Siddiqui and Company Limited. The key activities of JS bank can be divided into these broad categories: * Retail and consumer banking

* Treasury
* Corporate and commercial banking
* Investment banking

2.4. In the recent year i.e. 2012 JS bank has acquired the re-known HSBC which is the second foreign bank to leave the country, though and alarming point for the country but JS bank in turn has improved its financial position. The acquisition will improve and act as a catalyst to help JS bank with its growth strategies and be the number one banking service provider in near future. HSBS had a total branch network of 10 branches and an asset base of nearly 59 billion.

2.5. JS bank has a huge background with the name attached to it i.e. JS Investments which is a great support to develop trust amongst the consumer base. So, definitely as a subsidiary of JS investments it is perceived...
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