The Credit Rating Agency Limited P R Date PACRA Maintains Entity Ratings of Askari Limited 28-Jun-2019 Entity Rating Type Current Previous (28-Jun-2019) (27-Dec-2018) Action Maintain Maintain Analyst Long Term AA+ AA+ Muhammad Obaid Short Term A1+ A1+ [email protected] Outlook Stable Stable Rating Watch - - +92-42-35869504 www.pacra.com Askari Bank has shown stable growth rate over the years. This has ensured its relative profitability to remain intact. The bank has a strong brand image, flanked by its affiliation with one of the strongest conglomerate, Group. The ownership structure has proven itself a strong backing, as reflected by Askari Bank's history. The Bank has continued the growth Applicable Criteria trajectory during 2018. The net spread has improved on the back of significant improvement in asset yield amidst slightly higher cost of funds. Volumetric increase in earning assets, led by Methodology | Financial loan portfolio augmentation, provided support to profitability; but was negatively impacted due Institution (Jun 18) to higher provisioning expense on mark-to market loss of investment and NPL provisioning. Methodology | Criteria | The bank had a sizeable reversal in specific charge NPL provisioning during 2018, yet the Rating Modifier (Jun 18) positive impact was diluted by a higher incidence of provisioning expense. This also impacted the profitability for 2018. Methodology | Correlation The Bank's CAR is 12.5% at end-Dec18. The Tier 1 capital increased from 9.31% in 2017 to Between Long-Term And 10.92% in 2018 while the overall CAR improved by 40 basis points. With minimum CAR Short-Term Rating Scale requirement of 12.5% by next year, the Bank would need to tread ahead with a cautious (Jun 18) approach while lending in order to maintain sustainability with growth. The deposit growth was sizeable, enabling the bank to hold its relative position. Related Research The ratings are dependent upon sustainability of the bank 's relative positioning and continuous improvement in capital adequacy, whereas, effective management of spreads remains important. Meanwhile, holding the asset quality is a pre-requisite. Sector Study | (Jun 19) About the Entity Askari Bank Limited, incorporated in 1991, operates with a network of 516 branches (at end- Mar19). The share in total customer deposits stood at 4.4% at end-Dec18. With change in ownership in 2013, Fauji Foundation (FF) emerged as the key sponsor (~71.9% stake). The remaining shareholding is widely spread. The overall control vests in an eleven-member board of directors including the President. Five members represent FF, four are independent, while one is NIT nominee. The BoDs during June 2018 appointed Mr. Abid Sattar as the new President and CE of Askari Bank Limited. He is a seasoned banker with rich industry experience spanning over three decades.

Disclaimer This press release is being The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. transmitted for the sole purpose of Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular dissemination through print/electronic media. The press release may be used instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer in full or in part without changing the financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a meaning or context thereof with recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market due credit to PACRA price or suitability for a particular investor. The Pakistan Credit Rating Agency Limited P R Date PACRA Maintains Instrument Rating of Askari Bank Limited | 28-Jun-2019 TFC VI ( Additional Tier I ) | Jul-18 Debt Instrument Rating Type Current Previous (28-Jun-2019) (01-Jan-2019) Analyst Action Maintain Maintain Muhammad Obaid Long Term AA- AA- [email protected] Short Term - +92-42-35869504 Outlook Stable Stable www.pacra.com Rating Watch - -

Askari Bank has shown stable growth rate over the years. This has ensured its relative profitability to remain intact. The bank has a strong brand image, flanked by its affiliation with Applicable Criteria one of the strongest conglomerate, Fauji Foundation Group. The ownership structure has proven itself a strong backing, as reflected by Askari Bank's history. The Bank has continued the growth trajectory during 2018. The net spread has improved on the back of significant improvement in Methodology | Financial asset yield amidst slightly higher cost of funds. Volumetric increase in earning assets, led by Institution (Jun 18) loan portfolio augmentation, provided support to profitability; but was negatively impacted due Methodology | Basel III to higher provisioning expense on mark-to market loss of investment and NPL provisioning. Compliant - Debt The bank had a sizeable reversal in specific charge NPL provisioning during 2018, yet the Instrument (Jun 18) positive impact was diluted by a higher incidence of provisioning expense. This also impacted the profitability for 2018. Related Research The Bank's CAR is 12.5% at end-Dec18. The Tier 1 capital increased from 9.31% in 2017 to 10.92% in 2018 while the overall CAR improved by 40 basis points. With minimum CAR requirement of 12.5% by next year, the Bank would need to tread ahead with a cautious Sector Study | Commercial approach while lending in order to maintain sustainability with growth. The deposit growth was Bank (Jun 19) sizeable, enabling the bank to hold its relative position. The ratings are dependent upon sustainability of the bank 's relative positioning and continuous improvement in capital adequacy, whereas, effective management of spreads remains important. Meanwhile, holding the asset quality is a pre-requisite. About the Entity Askari Bank Limited, incorporated in 1991, operates with a network of 516 branches (at end- Mar19). The banks share in total customer deposits stood at 4.4% at end-Dec18. With change in ownership in 2013, Fauji Foundation (FF) emerged as the key sponsor (~71.9% stake). The remaining shareholding is widely spread. The overall control vests in an eleven-member board of directors including the President. Five members represent FF, four are independent, while one is NIT nominee. The BoDs during June 2018 appointed Mr. Abid Sattar as the new President and CE of Askari Bank Limited. He is a seasoned banker with rich industry experience spanning over three decades.

About the Instrument AKBL issued ADT-1 TFC-VI during the year to boost its CAR. The TFC-VI (Additional Tier 1) is an OTC, listed, unsecured, subordinated, perpetual and non-cumulative instrument, with profit rate of 6 Month Kibor + 1.5% and carries a call option which may be exercised after Jun-23, subject to approval of the SBP.

Disclaimer This press release is being The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. transmitted for the sole purpose of Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular dissemination through print/electronic media. The press release may be used instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer in full or in part without changing the financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a meaning or context thereof with recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market due credit to PACRA price or suitability for a particular investor.

The Pakistan Credit Rating Agency Limited P R

Date PACRA Assigns Preliminary Rating to TFC VII (Tier 2) of Askari 21-Nov-19 Bank Limited Analyst Usama Liaquat Debt Instrument [email protected] Rating Type Current +92-42-35869504 (21-Nov-19) www.pacra.com Action Preliminary Long Term AA Short Term - Applicable Criteria Outlook Stable Rating Watch - PACRA_Methodology_FI_FY19 | Jun-19 PACRA_Methodology_DI Askari Bank has shown stable growth rate over the years. This has ensured its relative profitability Basel III_FY19 | Jun-19 to remain intact. The bank has a strong brand image, flanked by its affiliation with one of the strongest conglomerate, Fauji Foundation Group. The ownership structure has proven itself a strong backing, as reflected by Askari Bank's history. The Bank has continued the growth trajectory during 9MCY19. The net spread has inched up on the back of significant improvement in asset yield amidst higher cost of funds leading to enhanced profitability for 9MCY19. Volumetric increase in earning assets, led by loan portfolio augmentation, provided support to profitability; but Related Research was impacted due to higher provisioning expense on mark-to market loss of investment and NPL provisioning. The bank recorded reversal in specific charge NPL provisioning during CY18 and 9MCY19 which supported bottom-line. Sector Study | Commercial The Bank's CAR is 12.73% at end-Sep19. The Tier 1 capital increased from 10.92% in 2018 to Bank | Jun-19 11.25% in 9M2019 while the overall CAR improved by 22 basis points. The Bank is issuing tier II TFC of PKR 7bln inclusive of PKR 2bln green shoe option which will enhance its capital base, thereby boosting its lending capacity. Additionally, the Bank will comfortably comply with statutory requirement of 12.5% CAR as at end-Dec19. The deposit growth was sizeable, enabling the bank to hold its relative position. The ratings are dependent upon sustainability of the bank's relative positioning and continuous improvement in capital adequacy, whereas, effective management of spreads remains important. Meanwhile, holding the asset quality is a pre-requisite

About the Entity Askari Bank Limited, incorporated in 1991, operates with a network of 517 branches (at end- Sep19). The banks share in total customer deposits stood at 4.4% at end-Dec18. Fauji Foundation (FF) is the key sponsor (~71.9% stake). The remaining shareholding is widely spread. The overall control vests in an eleven-member board of directors including the President. Five members represent FF, four are independent, while one is NIT nominee. Mr. Abid Sattar is the President and CE of Askari Bank Limited. He is a seasoned banker with rich industry experience spanning over three decades.

About the Instrument AKBL is planning to issue Tier-2 TFC-VII during the year to boost its CAR. The TFC-VII (Tier 2) will be an unsecured, subordinated, rated and DSLR listed/Privately placed term finance certificate of upto PKR 7bln, inclusive of Green Shoe option of PKR 2bln. The profit rate is 3 Month Kibor + 1.2%. The tenor of instrument is up to 10 years and profit will be payable quarterly in arrears on the outstanding principal amount and principal will be paid in 4 equal quarterly installments in year 10. The instrument carries a call option which may be exercised after 20th coupon payment (5 years), subject to approval of the SBP.

Disclaimer This press release is being transmitted for the sole purpose of dissemination through The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. print/electronic media. The press Our ratings reflect an independent, professional and impartial assessment of the risks associated with a release may be used in full or in particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit part without changing the ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA meaning or context thereof with opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the due credit to PACRA security's market price or suitability for a particular investor.