PACRA upgrades HabibMetro's long-term rating to AAA

July 03, 2026 (MLN): Habib Metropolitan Bank Limited has had its entity ratings upgraded by the Pakistan Credit Rating Agency (PACRA), with the long-term rating raised to "AAA" from "AA+" and the short-term rating maintained at "A1+", with a stable outlook.

The rating action was taken by PACRA on June 30, 2026, ending a run of more than a quarter-century during which the bank was rated "AA+", a rating it had held since 2001, including through the 2006 merger of the Pakistan branches of Habib Bank AG Zurich (HBZ) into the erstwhile Metropolitan Bank Limited.

HBZ holds 51% of HabibMetro's issued share capital and exercises majority ownership and control over the bank, PACRA noted.

The agency observed that HBZ is licensed and supervised by Switzerland's Financial Market Supervisory Authority (FINMA) under the Swiss Federal Banking Act, establishing a formal group linkage between HabibMetro and the HBZ Group.

As a result, the bank is subject to dual-layer regulatory oversight, primary prudential supervision by the State Bank of Pakistan at the local level, and consolidated supervision by FINMA at the group level, a structure PACRA said gives the bank a distinct advantage not shared by much of its peer universe and underpins its assessment of ownership strength, governance oversight, and the likelihood of group-level support.

Since the merger, the parent-subsidiary relationship has benefited both sides, with HBZ and HabibMetro each posting growth across deposits, equity, and profitability, PACRA said, adding that the bank has demonstrated smooth management transitions reflecting the strength and continuity of its governance structure.

Group-level resources were said to help the bank assimilate international best practices while benefiting from advancements in information technology, IT infrastructure, and risk management.

The agency further noted that HabibMetro's credit profile has been tested across multiple economic cycles since it was first rated, demonstrating resilience and a strong ability to hold its ground in trade finance, its core strength, despite volatility on the external front, particularly in exports.

The bank's standalone financial strength remains a key rating consideration, with healthy capitalization supported by strong internal capital generation and prudent balance sheet management, sound asset quality indicators, a diversified earning asset base, a robust liquidity profile, and a stable deposit franchise.

PACRA also pointed to the bank's well-established domestic franchise in trade finance and its progress in expanding transaction banking capabilities and its digital platform, which have strengthened customer engagement and competitive positioning.

On the financial performance, the agency said total deposits grew 20.8% to Rs1,119.6 billion in CY25 from Rs927.1 billion in CY24, with the CASA ratio strengthening to 80.1% from 78.5%.

Non-markup income rose 15.1% to Rs24.5 billion from Rs21.3 billion, driven by foreign exchange income, securities gains, and fee-based revenues. Profit before tax stood at Rs49.0 billion, down from Rs52.7 billion, while profit after tax came in at Rs22.6 billion against Rs24.7 billion in the previous year.

The bank's Capital Adequacy Ratio stood at 17%, compared with 19.3% in CY24, achieved entirely through organic capital generation with no reliance on subordinated debt, which PACRA said distinguishes HabibMetro from many of its peers. The equity base rose to Rs127.8 billion from Rs115.0 billion, positioning the bank among the most efficiently run institutions in the sector.

PACRA said the bank's ability going forward to preserve its strong domestic franchise and effectively leverage the financial strength, governance framework, and international banking network of HBZ will remain important.

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