December 27, 2018 (MLN): MCB Islamic Bank Limited has been assigned long-term ratings of ‘A’ and short-term rating of ‘A1’, with a positive outlook forecast.
The long term rating of “AAA” reflects its robust profile duly supplemented by its strong market position in local banking landscape, established brand equity, and sound financial profile.
MIB’s standalone risk profile is improving. The management’s strategy is to focus primarily on high-rated, blue chip corporate clients. Meanwhile, undertaking new business lines including Micro, SME and Consumer financing are also on the horizon.
MIB has set relatively high targets for deposit growth and plans to focus on maintaining its financing book quality. The thrust of the business plan is to achieve breakeven. The bank is in the process of advancing its operational infrastructure including branch network. Technological implementation and setting governance structure were mile stones achieved by bank in the last year.
The ratings incorporate inherent constraints faced by MIB, mainly limited branch network, small deposit base and high cost structure particularly in early years. Lately, the bank’s branch network and deposit base witnessed improvement which may bode well for achieving break even in upcoming year.
Going forward, monitoring of CAR is important while expanding lending portfolio. The positive outlook captures the continued improvement in the MIB's relative positioning in the growing Islamic banking industry.
