Karachi, June 2019: The ratings reflect relative positioning of the bank among large banks of the country. Advances grew faster than the industry average, resulting in a very high ADR of ~71%, highest amongst its peers. Another reason for the hike in ADR was less than average growth in deposit base, though the mix of which improved. The Bank shed high cost deposits and added a few percentage points to the CA part of the CASA mix. Resultantly, BAFL's cost of funds is comparable to some of the large banks. The Bank has a sound foothold with a considerable presence across the country which has enabled its deposit base to increase. Operating cost structure has improved on YoY basis on account of cost rationalization. The Bank saw healthy uptick in its profitability. Overall infection ratio has reduced due to an expanded loan book, while the Bank has maintained its asset quality. Effective implementation of the envisaged business strategy is important. The increasing asset yield and cost efficiency enabled spreads to increase. The bank issued Tier-I instrument to improve its capital, whereas, enhancing Tier-II capital through issue of a new instrument is also an option, which the Bank can continue to avail from time to time.

The Bank has continued its growth stride; continuation of the same is considered positive. Herein, augmentation of the Bank's capitalization backed by strong sponsors and adding granularity to its advances and deposits book are essential.