Pubali Bnak Ltd

BANK

ENTITY RATING

Date of Rating Declaration Long Term Short Term

Valid Till:

2.1 Pubali Bank Limited (hereinafter called as ‘PBL’ or ‘The Bank’) has been playing a vital role in socio-economic, industrial and agricultural development as well as in the overall economic development of the country through savings mobilization and investment of funds. The Bank is a planned successor of the erstwhile Eastern Mercantile Bank Limited established in 1959. After independence of Bangladesh in 1971, the bank was nationalized through Presidential Order no 26 of 1972 renamed as Pubali Bank. Subsequently, the Bank was denationalized in 1983. PBL is one of the largest Private Commercial Banks in Bangladesh with an asset size of TK 157,291.22 million as on December 31, 2011. The shares of the company are listed with both bourses of the country and are traded under ‘A’ category. The last one year’s stock price chart is given below:

2.2 The principal activities of the PBL is providing all types of commercial banking services as per the Banking Companies Act 1991 and the directives from Bangladesh Bank, through the operational network of 410 branches all over the country. The Registered and Corporate Head Office is located at 26, Dilkusha Commercial Area, Dhaka - 1000, Bangladesh.

2.3 The deposit of PBL accounts for …..% of the total market deposits and holds …..% of the loan & advances of the banking system as on 31st December, 2011. The details of the product lines are given below:

PUBALI BNAK LTD. (PBL) P a g e 1 o f 11

May 2012 www.ncrbd.com

1.0 RATINGS

Ratings are based on Audited Financial Statement up to 31 December, 2011 along with the other relevant Quantitative as well as Qualitative information up to the Date of Rating Declaration.

Followed Financial Institutions Rating Methodology (Bank & NBFI) of NCR published in our website: www.ncrbd.com.

2.0 PROFILE

Provides all types of commercial banking services as per the Banking Companies Act and the directive from Bangladesh Bank

Operates with a network of 410 branches

BANK

Deposit Product Consumer Loans SME Banking Islamic Banking

Savings Bank Account Current Deposit AccountDwigun Sanchaya PrakalpoPubali Sanchaya PrakalpoShiksha Sanchaya PrakalpoPubali Pension SchemeFixed Deposit ReceiptMonthly Profit Based Fixed

DepositSpecial Notice Deposit

(SND)Monthly Profit Based Small

DepositTarget Based Small Deposit

Car Loan

Flat Purchase Loan

Household Durable Loans

Medical Equipment Loan

Govt. Primary School Teacher Loan

Demand Loan

PBL Sujon Rin

PBL Suborno Rin

PBL Kormo Uddogh Rin

Pubali Prochesta

Al-Wadeeah Current A/C Mudaraba Savings AccountMudaraba Short Notice

Deposit Mudaraba Term Deposit

Receipt Mudaraba Deposit Pension

AccountMudaraba Hajj Savings A/C

2.4 PBL has two subsidiary companies 1) Pubali Exchange Company (UK) Ltd. and 2) Pubali Bank Securities Ltd. Pubali Exchange Company (UK) Ltd. is a wholly own subsidiary of PBL, incorporated on the 22nd March, 2010 and started its operation from January 2011 to facilitate Bangladeshi expatriates living & working in the UK to send their remittance through legal channel in speedy & safe way.

Pubali Bank Securities Ltd. is a subsidiary of PBL incorporated on 9 October 1995 as a Public Limited Company to carry out all kinds of business in shares, stock and brokerage.

3.1 The shareholding pattern of PBL was found diversified among the Sponsors (10.98%), Bank & Financial Institutions (6.27%), Co-Operative Societies (4.19%), Other Institution (10.37%), Non Resident Bangladeshi (2.67%) and the General Public (65.52%) as on 31 December, 2011. The shareholding of the General Public and Financial Institutions has increased by 9.04% and 1.21% respectively in 2011 compared to the previous year. Beside there is an independent Director. The shareholding pattern in shown in the adjacent graph:

4.1 The BoD of PBL comprises of experienced professionals. There are three committees under this BoD namely, (i) Executive Committee (ii) Audit Committee and (iii) Shariah Supervisory Committee.

SL Name of BoD Members Designation Committee Experience

1

Mr. Hafiz Ahmed Mazumder, MP Chairman -

27 years

2 Mr. Habibur Rahman Vice Chairman Executive Committee, Member 27 years



1.0 RATINGS

Ratings are based on Audited Financial Statement up to 31 December, 2011 along with the other relevant Quantitative as well as Qualitative information up to the Date of Rating Declaration.

Followed Financial Institutions Rating Methodology (Bank & NBFI) of NCR published in our website: www.ncrbd.com.

2.0 PROFILE

Provides all types of commercial banking services as per the Banking Companies Act and the directive from Bangladesh Bank

Operates with a network of 410 branches

3.0 OWNERSHIP

Diversified shareholding structure

4.0 GOVERNANCE

Experienced BoD

11%

6% 4%

10%

3%

66%

Shareholding Stracture

Sponsors

Bank & Financial Institutions

Co-Operative So-cieties

Other Institution

Non Resident Bangladeshi

General Public

BANK

Credit Application Received by Branch

Credit Application Recommended by RM/Marketing

Zonal credit Officer (ZCO)

Head of Corporate Banking (HOCB) & Head of Credit (HOC)

Managing Director

Executive committee /Board

3 Mr. Moniruddin Ahmed Director Audit Committee, Member 27 years

4 Mr. Sk. Wahidur Rahman Director Executive Committee, Member 27 years

5 Mr. Manzurur Rahman Director Audit Committee, Member 27 years

6Mr. Syed Moazzem Hussain

DirectorExecutive Committee, Chairman

23 years

7Mr. Ahmed Shafi Choudhury

Director Audit Committee, Chairman19 years

8Mr. Muhammad Faizur Rahman

Director Executive Committee, Member9 years 2 months

9 Mr. Mohammad Yaqub Director - 19 years

10Mr. Fahim Ahmed Faruk Chowdhury

Director -14 years 3 months

11 Mrs. Rumana Sharif Director - 4 years

12Mr. Mustafa Shahriar Ahmed

Director Audit Committee, Member4 years

13 Mr. Musa Ahmed Director Executive Committee, Member 2 years 3 months

14 Mr. Khurshid-ul-AlamIndependent

DirectorAudit Committee, Member

6 months

5.1 The management has satisfactorily implemented the Risk Management Framework. The Bank formed a Risk Management Unit following the guideline of Basel-II. The Risk Management Unit (RMU) is headed by the Additional Managing Director. The Risk Management Unit’s Meeting is held regularly. The General Managers and Divisional Heads at Head Office are the members and the Division Head, ICDD is the member secretary to the Committee. The RMU is responsible to report to the Managing Director on regular basis and also maintain the compliance issues and implementation of the decisions. The monthly meeting of RMU is arranged on regular basis where six core risk areas are discussed, minuted and decisions are gradually implemented.

6.1 PBL follows a centralized credit approval system for SME and corporate clients. The credit approval system, monitoring & recovery functions are segregated from CRM. The bank follows the Credit Disbursement & Sanction Procedure flowchart as given below:



5.0 RISK MANAGEMENT FRAMEWORK

Specific manuals and guidelines for risk management

6.0 CREDIT RISK

Clearly defined delegation of authority for credit approval

BANK

PBL strictly follows the guideline/circulars received from Bangladesh Bank regularly approve of loans and advances. The Business Discretionary power for Loans & Advances and Foreign Exchange Transactions are strictly delegated as per the guideline/circulars duly approved by the BoD.

6.2 For recovery of NPL, from clients PBL follows a recovery procedure through the Credit Recovery, Administration and Monitoring Division. The Credit Recovery, Administration and Monitoring Division at Head Office, headed by Deputy Managing Director and head of CRM, review the NPL accounts along with the status of recovery and assess the adequacy of provisions on a quarterly basis. Moreover, the Bank has taken initiative for an early warning system to identify the problem accounts through review of the overdue statement using the format for classification and provisioning provided by the Bangladesh Bank guild line.

7.1 PBL has an exposure of TK 4,953.07 million in 2011 in the equity market which is 3.52% of total liabilities and is within the BB limit. The Bank has maintained a provision of TK 878.11 million in 2011 against loss of market on investment in capital market in through Pubali Bank Securities Limited.

8.1 The Bank is running its operation with highly sophisticated information and

communication technology at all of their 406 branches. To ensure a seamless integration

of information flowing through the extending customer services, PBL is using in-house developed core banking software, Pubali Integrated Banking System (PIBS).

Besides, Real-Time Centralized Online Banking System has been developed & deployed in 254 branches across the country and the rest of the branches will be brought under online banking network phase wise. One Stop Service has been implemented at their 295 branches. One stop service facility will be extended to all their branches phase wise. PBL will have its own ATM network with 1,000 ATM booths across the country. Moreover, the bank is the principal member of master card & visa card. Procurement of ATMs, POS, related software & hardware for card printing & personalization etc. including establishment of call center are under process.

For security awareness of database of the bank, ICT Policy & Business Continuity Plan has been approved by the Board. The online branches banking data are in stored & controlled centrally at the Data Center (DC) at IT Division. To ensure the security of data, the Bank has already established the Disaster Recovery (DR) Center at Uttara, Dhaka. Moreover, the Bank has achieved the success of implementation of Bangladesh



7.0 MARKET RISK

Exposed to market risk with investment in equity

8.0 OPERATIONAL RISK

Uses advanced IT for MIS

Uses investment banking software “FIntelligent”

Maintains day to day data back up

BANK

Automated Clearing House (BACH), Bangladesh Electronic Fund Transfer (BEFTN), Credit Information Bureau (CIB) reporting etc. as per guideline of Bangladesh Bank.

8.2 The Bank formed an Internal Control & Compliance Department (ICCD) under the guideline provided by Bangladesh Bank which was headed by the Managing Director which used to conduct independent inspections monthly to ensure compliance with Lending Guidelines, operating procedures, FI policies and Bangladesh Bank directives.The ICCD is composed of 1) Risk Management Unit, 2) Management reporting Syetsm (MRS) Committee and 3) Central Complience Unit.

9.1 The financial sector of Bangladesh comprises the money and the capital market, insurance and pensions, and microfinance. The banking subsector dominates the financial sector of Bangladesh, while NBFIs and the capital market play a relatively limited role. The whole scenario of the economy of the country can be ascertained by examining the condition of the banking sector and macroeconomic management largely depends on the performance of the banking industry.

Banking sector grew primarily in the public sector with main emphasis on restructuring of the financial system and development needs of the war-torn economy with gradual liberalization in subsequent years. It was increasingly felt that banks should be allowed in the private sector for giving a fillip to development process on the basis of private initiative. In the 80’s for the first time a number of banks in the private sector were allowed, which are called the 1st generation banks. Subsequently in the mid 90’s some more banks in the private sector also commenced operations, which are called the 2nd generation banks. Finally, in 1999, 3rd generation private sector banks came into operation. Presently, in addition to the Bangladesh Bank–the central bank of Bangladesh–there are 4 state–owned commercial banks (SCBs), 5 state–owned specialized banks, 30 domestic private commercial banks (PCBs), and 9 foreign commercial banks (FCBs).The commercial banks are at the core of the financial system and account for more than 80% of the assets of the financial system.

9.2 The specialized banks are often called development financial institutions (DFIs). Out of the five specialized banks (enjoying 10% of the total industry’s assets), the Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank were created to meet the credit needs of

the agriculture sector, while the Bangladesh Shilpa bank and Bangladesh Shilpa Rin Sangsthan were set up to provide credit facilities for setting up industrial projects in the

private and public sector.

9.3 Bangladesh Bank, as the central bank, has legal authority to supervise and regulate all the banks and non-bank financial institutions of the country. It performs the traditional role as central bank. The prudential regulations of Bangladesh Bank include: minimum capital requirements, limits on loan concentration and insider borrowing and guidelines



9.0 INDUSTRY RISK ANALYSIS

Economy is dominated by the banking sector

Higher demand for credit in the private sector

Increased liquidity pressure on banking industry

BANK

for asset classification and income recognition. BB has the power to impose penalties for non-compliance and also to intervene in the management of a bank if serious problems arise. It also has the delegated authority of issuing policy directives regarding the foreign exchange regime. BB monitors the performance of the banking sector using CAMELS framework (CAMELS: capital adequacy, asset quality, management soundness, earnings, liquidity and sensitivity to market risk). Banks are subject to periodic comprehensive inspections and ad-hoc special inspections.

9.4 The movements of total deposits and domestic credit show that during FY2010 the growth of deposits was higher than the growth of credit, and the growths of both deposits and credits were higher during FY2010 compared to FY2009. Total deposits increased by 21.65 percent during FY2010 compared to 20.51 percent during FY2009. On the other hand, total credit grew by 17.90 percent during FY2010 compared to 16.03 percent over the same period of the previous fiscal mainly due to rise in the growth of private sector credit. Credit to the private sector grew by 24.24 percent during FY2010 compared to 14.62 percent during FY2009. However, credit to the public sector decreased by 1.71 percent during FY2010 as against 20.64 percent growth in FY2009. However, both the deposits and credits grew by 21.52 percent and 20.33 percent respectively at the end of September 2010.

9.5 Traditionally, the main sources of private sector financing for businesses in Bangladesh are banks. About 90 percent institutional credit to the private sector is supplied by the 47 scheduled banks. The growth of outstanding credit to private sector went up to 24.24 percent during FY2010 which was 14.62 percent during FY2009 mainly due to higher credit demand for investment activities in the private sector. Credit to the

private sector grew by 26.65 percent at the end of September 2010.

9.6 During 2010 banks disbursed Tk. 111.17 billion as agricultural credit which was 96.57 percent of the target of Tk. 115.12 billion for FY2010 and 19.74 percent higher

than disbursement over FY2009. Disbursement of agricultural credit during July-October, 2010 stood higher at Tk. 36.09 billion as compared to Tk. 29.75 billion during July-

October, 2009.

9.7 The government's net borrowing from all commercial banks and financial institutions through issuing treasury bills (T-bills) and bonds stood at TK 93.55 billion during July-March period of the fiscal '11, according to the central bank statistics. During the period, the government borrowed from the banking system up to 60 per cent of its annual borrowing target, which was fixed at TK 156.80 billion to finance the budget deficit for the FY11.

10.1 The equity base of PBL stood at TK 16,408.87 million composed of share capital of TK 6,707.61 million and statutory reserve of TK 9,701.26 million, other reserves of TK



10.0 CAPITAL ADEQUACY

Meets the capital adequacy requirement

BANK

2,934.17 million and retained earnings of TK 1,536.31 million during 2011. On account of equity injection of TK 2,029.00 million in 2011, UCL’s risk absorption capacity has improved. The shareholder’s equity to total assets, however slightly decreased to 10.43% in 2011 from 11.19% in 2010.

10.2 According to Basel-II capital requirement the RWCAR stood at 13.36% in 2011 against 11.23% in 2010 (which was revised subsequently to 9% for July 01, 2010-June 30, 2011; 10% for July 01, 2011 to onwards vide ‘BRPD Circular no. 10/2010 and Guidelines on RBCA).

10.3 The Risk Weighted Asset (RWA) was TK 1, 32,581.60 million in 2011 against TK 1, 34,608.80 million in 2010. Total eligible capital stood at TK 13,258.16 million (10% of RWA) against maintained Minimum Capital Requirement (MCR) as Core Capital (Tier-I) of TK 14,350.01 million and Supplementary Capital (Tier-II) of TK 3,626.69 million; representing a capital surplus of TK 4,718.55 million. Finally the CAR on Core Capital (Tier-1) stood at 10.82% (against minimum requirement of 5.00%) and on Supplementary Capital (Tier-II) stood at 2.74% (against minimum requirement of 5.00%).

11.1 The gross loans & advances of PBL increased to TK 1, 04,650.38 million in 2011 against TK 89,106.21 million in the 2010, registering a growth of 17.44%. The loans & advances comprised of loans (27.26%), cash credit (20.05%), overdrafts (18.86%), LTR (18.19%), lease finance (2.54%) and others (13.10%) during 2011.The loans & advances are available for public sector, private sector and Co-Operative Sector. The volume of risk asset portfolio decreased to 66.53% of total assets in 2011 against 69.36% in 2010. The finance to deposit ratio also decreased to 86.57% in 2011 from 92.47% in 2010.

(Amounts in TK million) 2011 2010 2009

Gross Finances 104,650.39 89,106.21 74,203.33

Impaired Lending 2,146.38 1,036.21 2,197.40

Impaired Lending / Gross Finances (%) 2.05 1.16 2.96

Loan Loss Provision/ Impaired Lending (%) 100.59 173.01 70.99

Net Impaired Lending / Equity (%) 26.91 20.11 40.86

11.2 The non-performing loans (NPL) was recorded TK. 2,146.38 million in 2011 against TK. 1,036.44 million in 2010, a significant growth of 107.09%. The NPL under substandard and doubtful increased significantly by TK. 199.32 million and TK 89.59 million respectively in 2011. The impaired portfolio comprised of 14.61% substandard (against 6.29% in 2010), 7.33% doubtful (against 3.73% in 2010) and 78.05% Bad & loss (against 89.98% in 2010) during 2011. The impaired loan to gross finances ratio increased to 2.05% in 2011 from 1.16% in 2010.

11.3 PBL has maintained total provision of TK 2,158.95 million with excess provisions of TK 2.61 million in 2011 against required provision of TK 2,156.34 million. The gross NPL coverage has decreased to 100.59% in the 2011 from 173.01% in the 2010. The recovery performance was .....% in 2011 against .....% in 2010 on classified loans.



11.0 ASSET QUALITY

Impaired loans to total loan ratio increased

Recovery of classified loan improved

High proportion of investment in capital market

BANK

11.4 The top twenty exposures stood at TK 4,236.15 million in 2011 which accounts for 4.04 % of gross finance in 2011 with composition of 63.97% funded exposure and 36.03% non funded exposure. Total amount of large loan exposures (above 10% of total capital) was recorded TK 26, 666, 48 million (against ten accounts) in 2011 which was TK 33,742.53 million (against twenty accounts) in 2010. There was no classified loan under the large loan category during the last two years.

11.5 The loan portfolio was found diversified. The industrial loans & advances was 34.74% of total loans & advances in 2011.The composition of industrial loans & advances were in the form of advances to service industry (14.88%), Textile (16.29%), garments (9.67%), food & allied (6.52%), edible oil (8.99%), energy & power (4.25%), steel and engineering (5.62%), ship scraping (3.84%) and others (29.94%).

11.6 The off-balance sheet exposure increased to Tk. 33,616.27 million in 2011 against Tk. 27,735.81 million in 2010. The composition of the off-balance sheet exposure was 83% Letter Credit, 12% Letter of Guarantee, 2.17% Bills for Collection and 2.83% other contingent Liabilities.

12.1The management team has been organized with a good blend of qualified and experienced professionals. The management team is headed by the Managing Director & CEO, Mr. Helal Ahmed Chowdhury having intense experience in banking.

SL Name of the DepartmentHead of the Department

Qualification Experience (Years)

1.Central Accounts Divisions

Mr. Md. Sayeed Ahmed, FCA

FCA,ACMA, CGMA,MBA, M.Com, B.Com (Hons)

2.

Information Technology Division, Card Department, General Services & Development Division, Research & Development Division

Mr. Md. Mohammad Ali

BSc (H), MSc, MBA, MDS

Vast experience in

3.

Credit Administration, Monitoring & Recovery Division, Establishment Division

Mr. Sk. Golam Mohammad

B.Com(Hons.), M.Com, Part-I of IBE

4. Board DivisionMr. Md. Sayeed

SikderBSc (Hons.), MSc, DAIBB

5. International DivisionMr. Md. Hasan

AliBSc (H), MSc.

6.Consumer’s Credit Division, Lease Finance Division, Law Division

Mr. Dewan Ruhul Ahsan

LL.B. (Hons.), LL.M.

7. Mr.

Mr.

Mr.

12.2 PBL has well defined HR policy. The total number of employees of the company



12.0 MANAGEMENT

Experienced management team

BANK

stood at 6,219 as on December 31, 2011 against 5,534 as on December 31, 2010. The Bank offers to regular basis training programs through Bangladesh Institute of Bank Management (BIBM), Bangladesh Bank Training Academy (BBTA), BBT and others National Institutions. During 2011, PBL Training Institute conducted 65 training programs which was participated by 1,963 officers of the bank against 65 training courses with 2,186 participants in 2010.

13.1 The overall financial performance of PBL deteriorated during 2011 compared to the previous year. The net interest-based income stood at TK 6,271.31 million in 2011 against TK 5,213.32 million in 2010 and Net non-interest income increased to TK 1,581.88 million in 2011 from TK 1,376.14 million in 2010. The EBT decreased to TK 4,535.83 million in 2011 from TK 4,980.05 million in 2010, registering a decline by 8.92%.

13.2 The company’s efficiency ratio (cost to total net revenue) has slightly deteriorated to 44.13% in 2011 from 40.61% in 2010. The ratio of provision expenses to pre provision profit increased to 17.29% in 2011 from 9.21% in 2010. The net profit after tax decreased to TK. 2,265.83 million in 2011 from TK. 3,233.09 million in 2010, registering a notable decline of 29.91%.

13.3 The performance of intermediation efficiency, the Net Interest Margin (NIM) slightly decreased to 4.39% in 2011 from 4.42% in 2010. The interest spreads slightly declined to 4.50% in 2011 from 4.75% in 2010 on account of increase in cost of fund to 5.28% in 2011 from 4.08% in 2010. ROA reduced to 1.25% in 2011 from 2.52% in 2010 and the ROE also decreased to 15.93% in 2011 from 22.48% in 2010.

14.1 The maturity analysis showed Rate Sensitive Assets (RSA) under one year maturity bucket amounting to TK. 38,761.04 million with net positive liquidity gap of TK. 1,521.16 million against TK 37,248.88 million of Rate Sensitive Liabilities (RSL). Under the above one year maturity bucket, RSA amounting to TK. 33,808.99 million represents net positive liquidity gap of TK 3,438.76 million against RSL of TK 30,370.23 million in 2011. Maturity analysis indicates that the company maintains reasonable maturity gap between assets & liabilities in case of under one year maturity buckets and above one year maturity bucket.

14.1.1 PBL had adequately maintained the liquidity requirement with 6% Cash Reserve Requirement (CRR) and 13% Statutory Liquidity Ratio (SLR) with surplus amount of TK 0.83 million and Tk. 6,196.86 million respectively in 2011.

14.2 The main source of PBL’s funding is deposits (85.80%), followed by borrowing (0.33%) and non interest bearing liabilities (13.87%). The deposit has increased to TK



14.0 LIQUIDITY

MANAGEMENT

ALCO monitors the liquidity management

Treasury Department manages liquidity under approved policy guidelines

13.0 EARNINGS

QUALITY

Significant decline in net profit, ROE and ROA

BANK

120,879.79 million in 2011 from TK 96,358.49 million in 2010, registering a growth of 25.45%. The deposit mix was historically dominated by the time deposit. The borrowing has decreased to TK 459.68 million in 2011 from TK 3,288.19 in 2010, implies the dependency on borrowing from banks have decreased.

The top twenty deposits stood at TK 7,009.00 million in 2011, which accounts for 5.79% of total deposits in 2011 against …% in 2010.

14.3 The average cost of borrowing from banks was 12.50% during 2011. The Bank has availed call loan of TK 204.37 million in 2011. The weighted average call money interest rate was 12.27% in 2011.

14.4 The management of liquidity and funding is carried out by the Treasury Department under approved Policy guidelines. The formulation of risk management policy, setting liquidity and examine how liquidity requirements are likely to evolve under different assumptions, interest rate, exchange rate and equity pricing are the responsibilities of the ALCO which approves the liquidity contingency plan for six months.

The ALCO monitors the market risk and liquidity risk regarding the potential change in the earnings due to change in the rate of interest and foreign exchange rates. Mr. Helal Ahmed Chowdhury, the Managing Director of the bank calls ALCO meeting at least once in a month. The ALCO is composed of fourteen members including the Managing Director.



ANALYSTS

DISCLAIMER

NCR has used due care in preparation of this document. Our information has been obtained from sources we consider to be reliable but its accuracy or completeness is not guaranteed. NCR shall owe no liability whatsoever to any loss or damage caused by or resulting from any error in such information. None of the information in this document may be copied or otherwise reproduced, stored or disseminated in whole or in part in any form or by any means whatsoever by any person without NCR’s written consent. Our reports and ratings constitute opinions, not recommendations to buy or to sell.

Source of FundWeighted Average Cost

(In percentage)Range

(In percentage)Bangladesh Bank 5.50 5.50Call Money 12.27 7-21

BANK



National Credit Ratings- Rating Scales and Definition Long Term Credit Ratings

( Bank/Financial Institutions/ NBFIs/Corporate/Debt Instruments)

Rating Scale Definition

INVESMENT GRADE

AAAExcellent quality, offering highest safety for timely servicing of financial obligations. Such institutions carry minimum risk

AA+, AA, AA-Very strong capacity for timely servicing of financial obligations offering high safety. Such institutions carry very low risk.

A+, A, A-Strong capacity for timely servicing of financial obligations offering adequate safety. Such institutions carry low credit risk.

BBB+, BBB, BBB-

Adequate capacity for timely servicing of financial obligations offering moderate safety. The rating category denotes a moderate credit risk. However changes in circumstances or economic conditions are more likely to affect the capacity for timely servicing of financial obligations.

NON –INVESTMENT GRADE

BB+, BB, BB-Inadequate safety for timely servicing of financial obligations. Such institutions carry high credit risk. The entity remains more vulnerable to adverse economic changes over time.

B+, B, B- Low safety for timely servicing of financial obligations.

CCC, CC, C Very high risk for timely servicing of financial obligations.

DEntities with this rating are of the lowest category. They are either in default or likely to be in default soon.

Short Term Credit Ratings( Bank/Financial Institutions/ NBFIs/Corporate/Debt Instruments)

Rating Definition

ST-1Strongest capacity for timely payment of financial commitments and carry lowest credit risk.

ST-2 Strong capacity for timely payment of financial commitments and carry lowest credit risk

ST-3Satisfactory capacity for timely payment of financial commitments and carry very low credit risk.

ST-4Moderate capacity for timely payment of financial commitments and carry Moderate credit risk

ST-5 Uncertain capacity for timely payment of financial commitments and carry high credit risk.

ST-6 Indicates actual or inherent payment default.

Pubali Bnak Ltd

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