November 23, 2018 (MLN): Pakistan Credit Rating Agency (PACRA) has downgraded the entity ratings of SME Bank Limited, to ‘CCC’ for long term and maintained it at ‘B’ for short term. The outlook forecast on these ratings is ‘negative.
Earlier on June 12, 2018, PACRA had downgraded the entity ratings of the company to ‘B-‘ for long term and ‘B’ for short term.
A formal press release on the matter expounds that the Government is in the process of divesting approximately 94% shareholding of the SME Bank, which is an outcome of Government of Pakistan's endeavor to make SME Bank a vibrant institution by divesting GOP’s equity stake in the Bank along with the management control to a strategic investor.
“SME Bank Limited has a stressed profile, further exacerbated by the ongoing expenses without any significant revenue stream and financial support,” stated PACRA.
Due to continuous subdued performance of the bank, the equity base has been fully eroded (negative PKR 963mln at end-Sep18). Given already eroded equity base, the bank's operational expenditure is a continuing drag. Timely completion of privatization process is crucial for the Bank.
