JAMUNA BANK LIMITED - Credit Rating Information & Services ...

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May 25, 2009 ... CREDIT RATING REPORT. ON. JAMUNA BANK LIMITED. Page 1 of 1. Address: CRISL. Nakshi Homes. (4th Floor),. 6/1A, Segunbagicha,.
CREDIT RATING REPORT ON

JAMUNA BANK LIMITED REPORT: RR/264/09

Address: CRISL Nakshi Homes (4th Floor), 6/1A, Segunbagicha, Dhaka-1000 Tel: 7173700-1 Fax: 88-02-9565783 Email: [email protected] Analysts:

Md. Asiful Huq

[email protected]

Nasima Akter [email protected] Surveillance Rating: Long Term: AShort Term: ST-3

Outlook:

Stable

Rating : Based on Financials up to Dec. 2008

This is a credit rating report as per the provisions of the Credit Rating Companies Rules 1996. CRISL long-term rating is valid for only one year and short term rating for six months. After the above periods, these ratings will not carry any validity unless the bank goes for rating surveillance.

Long Term

Short Term

Surveillance Rating-2008

A-

ST-3

Surveillance Rating-2007

BBB+

ST-3

Outlook Date of Declaration

Stable May 25, 2009

1.0 RATIONALE Credit Rating Information and Services Limited (CRISL) upgrades long term credit rating of Jamuna Bank Limited (JBL) to A- (pronounced as single A minus ) from BBB+ (pronounced as triple B plus) and reaffirms short term rating to ST-3 based on financials upto FY2008 and other relevant qualitative and quantitative information. The above rating is on the basis of bank’s good fundamentals such as good financial performance, good asset quality, aboveaverage capital adequacy, increase in internal capital generation, diversified product lines etc. However, the above fundamentals, to some extent, are constrained by increase in operating cost compared to operating income, high cost of fund, limited delegation, moderate credit risk management, moderate corporate governance, dependence on term deposit etc. Banks rated in this category are adjudged to offer adequate safety for timely repayment of financial obligations. This level of rating indicates a banking entity with an adequate credit profile. Risk factors are more variable and greater in periods of economic stress than those rated in the higher categories. Short term rating indicates good certainty of timely payment. Liquidity factors and company fundamentals are sound. Although ongoing funding needs may enlarge total financing requirements, access to capital markets is good. Risk factors are small.

JAMUNA BANK LIMITED

CRISL also placed the bank in ‘Stable’ Outlook in consideration of its existing fundamentals and steady business growth.

PRINCIPAL ACTIVITY

Overall financial performance of the bank was good in 2008. Pre-tax profit of JBL rose to Tk.865.82 million in 2008 from Tk.405.04 million in 2007 and net profit after tax increased noticeably to Tk.479.44 million in 2008 from Tk. 89.11 million in 2007. ROAA rose to 2.98% in 2008 from 1.74% in 2007 against the 3.19% of peer average. Similarly, ROAE of JBL significantly increased to 45.36% in 2008 from 25.17% in 2007.

Commercial Banking

INCORPORATED ON

April 02, 2001 CHAIRMAN

Mr. Sakhawat, Abu Khair Mohammad MANAGING DIRECTOR

Mr. Md. Motior

Rahman EQUITY

TK. 2,160.73 million

The asset quality of the JBL improved in 2008 over last year. Total NPL declined to Tk.598.31 million in 2008 from Tk.840.34 million in 2007. Gross NPL ratio fell considerably to 2.84% in 2008 from 5.06% in 2007. Similarly, the Net NPL ratio declined to 1.11% in 2008 from 1.28% in 2007. Gross NPL coverage ratio rose to 112.88% in 2008 from 98.19% in 2007. Overall capital adequacy of the bank was above average during 2008. Risk Weighted Capital Adequacy Ratio stood at 11.91% in 2008 comprising 10.39% of core capital and 1.52% supplementary capital. Internal rate of capital generation of the bank significantly increased to 26.29% in 2008 compared to 8.79% in 2007. The above increase was due to the substantial increase in profit. Leverage ratio improved to 13.65 times in 2008 from 14.94 times in 2007. Shareholders fund to total asset rose to 6.83% in 2008 from 6.27% in 2007.

TOTAL ASSETS

Overall operating efficiency of the bank declined in 2008. As growth of operating expense was higher compared to growth of operating income, efficiency ratio rose to 40.64% in 2008 from 37.96% in 2007. Yield per Tk.100 cost fell to Tk.252.28 in 2008 from Tk.345 in 2007 and against peer average of Tk.299.76.

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The sources of fund of the bank were deposit 86.29%, shareholders equity 6.83%, inter bank borrowing 1.25%, and other liabilities 5.63% as on 31 December 2008. Dependence on term deposits (59.91% of total deposits) along with overhead expenses pushed overall cost of fund up in 2008, which stood at 12.49%.

TK.31,646.63 million