Final PR
The Pakistan Credit Rating Agency Limited

Jhangeer Hanif

Muneeb Rashid

Applicable Criteria

  • Methodology | Debt Instruments Rating Methodology (Jun 17) [View]
  • Methodology | Criteria Modifiers (Jun 17) [View]
  • Methodology | Bank Rating (Jun 17) [View]

Related Research

  • Sector Study | Commercial Bank (Jun 17) [View]
This press release is being
transmitted for the sole purpose of
dissemination through print/electronic
media. The press release may be used
in full or in part without changing the
meaning or context thereof with
due credit to PACRA
PACRA Assigns Rating to MCB TFC II (Formerly NIB | TFC II) of MCB Bank Limited
 Rating Type Debt Instrument
 Action Upgrade
 Long Term AAA
 Short Term -
 Outlook Stable
 Rating Watch -

NIB Bank Limited (NIB) stands fully amalgamated with and into MCB Bank Limited (MCB) pursuant to the requirements of sanction order dated June 13, 2017, issued by the State Bank of Pakistan under section 48 of the Banking Companies Ordinance, 1962. Consequently, PACRA has realigned NIB TFC II (from hereon MCB TFC II) in line with the risk profile of MCB. The rating takes note of sustained financial profile, reflected in very strong capitalization; risk absorption capacity and sound liquidity. This has been enabled by the MCB's able parentage, wherein a diverse mix of sponsors - mainly led by Nishat Group - has been providing an effective oversight. The ratings factor in MCB's strong market positioning as well. The management intends to complete the tenor of the issued TFC.
About the Entity
MCB Bank is the fourth largest bank in terms of its share in total customer deposits (7% at end-Dec16) in the country. The bank is operating with a distinct domestic franchise, having 1,233 branches (as of 30-Jun-17). Compared to its peers, MCB Bank has limited oversees operations. MCB Bank is majority owned by Nishat group (~38%), a prominent business conglomerate, having diversified interests in textile, cement, power, financial services, and insurance sectors. Malayan Banking Berhad (Maybank) of Malaysia, has 20% stake in MCB (as of 30-Jun-17). A set of prominent domestic industrial groups also own a sizeable stake in the bank. Nishat group, in addition to MCB Bank, has strong presence in entire spectrum of financial services - Adamjee General Insurance; Adamjee Life Assurance; MCB Islamic Bank Limited and MCB-Arif Habib Savings and Investments Limited. The spectrum is gradually building synergistic benefits.

About the Instrument
The instrument is rated, listed, unsecured subordinated TFC of PKR 4,198mln issued in Jun14. Tenor of the instrument is eight years (Jun22) with a profit rate of 6M-KIBOR plus 115bps, payable semi-annually. 0.3% of the principal shall be redeemed till end-Dec21, while the rest 99.7% shall be redeemed at end-Jun22. TFC carries a call option, which can be exercised in part or full, after Jun19 subject to SBP approval.
The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.