Credit Rating of Banks/DFIs
Consolidated Position on Credit
Rating of Banks/DFIs (Updated as of
11-Aug-2021) (Rating History)
State Bank of Pakistan has been endeavoring to promote self-
discipline in the financial markets of Pakistan through
transparency and sufficient disclosure by the market
participants. In order to augment our ongoing efforts to
maximize disclosure for the benefit of stakeholders and
market participants, all banks/DFIs were required to get
themselves credit rated with effect from June 30, 2001. The
objective was to provide another yardstick to the market
participants and stakeholders for informed decision making,
promote healthy competition and induce financial institutions
to improve their state of financial affairs. This decision was taken
after consultations with the representatives of banks/DFIs.
Accordingly, banks/DFIs continuously get themselves credit
rated from credit rating agencies on the panel of SBP i.e.
banks’/DFIs’ rating is updated from year to year, within
six months from the date of close of each financial year.
Most of the banks/DFIs have already made their credit rating
public through print media and we have also compiled their
ratings for the benefit of all stakeholders.
Credit rating is an independent opinion expressed by the
professional bodies i.e. credit rating agencies that states
about capacity of an entity to meet its obligations and is based on
various quantitative and qualitative factors. These ratings
therefore, represent the opinions of respective rating agencies
and do not reflect the views of the State Bank of Pakistan.
Besides they also do not represent investment advice or should
be construed as such.
DIRECTOR
BANKING POLICY & REGULATIONS DEPARTMENT
STATE BANK OF PAKISTAN
STANDARD RATING SCALES AND DEFINITIONS BEING
USED BY PAKISTAN CREDIT RATING AGENCY (PACRA)
LONG TERM RATINGS SHORT TERM RATINGS
AAA – HIGHEST CREDIT QUALITY: A1+ : Obligations supported by the highest
capacity for timely repayment.
‘AAA’ ratings denote the lowest expectation of
credit risk. They are assigned only in case of A1 : Obligations supported by a strong
exceptionally strong capacity for timely payment capacity for timely repayment.
of financial commitments. This capacity is highly
A2 : Obligations supported by a satisfactory
unlikely to be adversely affected by foreseeable
capacity for timely repayment, although such
events.
capacity may be susceptible to adverse changes
in business, economic, or financial conditions.
AA – VERY HIGH CREDIT QUALITY:
A3 : Obligations supported by an adequate
‘AA’ ratings denote a very low expectation of
capacity for timely repayment. Such capacity is
credit risk. The capacity for timely payment of
more susceptible to adverse changes in
financial commitments. This capacity is not
business, economic, or financial condition than
significantly vulnerable to foreseeable events.
for obligations in higher categories.
A – HIGH CREDIT QUALITY:
B : Obligations for which the capacity for timely
‘A’ ratings denote a low expectation of credit repayment is susceptible to adverse changes in
risk. This capacity for timely payment of financial business, economic, or financial conditions.
commitments is considered strong. This capacity
may, nevertheless, be more vulnerable to
C : Obligations for which there is an
changes in circumstances or in economic
conditions than is the case for higher ratings.
inadequate capacity to ensure timely
repayment.
BBB – GOOD CREDIT QUALITY:
D : Obligations which have a high risk of
‘BBB’ ratings indicate that there is currently a low default or which are currently in default.
expectation of credit risk. The capacity for timely
payment of financial commitments is considered
adequate, but adverse changes in circumstances
and in economic conditions are more likely to
impair this capacity. This is the lowest investment
grade category.
BB – SPECULATIVE:
‘BB’ ratings indicate that there is a possibility of
credit risk developing, particularly as a result of
adverse economic change over time; however,
business or financial alternatives may be available
to allow financial commitments to be met.
Securities rated in this category are not
investment grade.
B – HIGH SPECULATIVE:
‘B’ ratings indicate that significant credit risk is
present, but a limited margin of safety remains.
Financial commitments are currently being met;
however, capacity for continued payment is
contingent upon a sustained, favorable business
and economic environment.
CCC, CC, C – HIGH DEFAULT RISK:
Default is a real possibility. Capacity for meeting
financial commitments is solely reliant upon
sustained, favorable business or economic
developments. A ‘CC’ rating indicates that default
of some kind appears probable. ‘C’ ratings signal
imminent default.
N.B.
A plus (+) or minus (-) may be appended to a rating to denote relative status within major rating
categories. Such suffixes are not added to ‘AAA’ long-term rating category, to categories below
‘CCC’, or to short-term ratings.
