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Moody's puts four Pakistani banks under review

LIMASSOL (February 22 2003) : Moody's Investors Service has placed the financial strength ratings of four Pakistani banks on review for possible upgrade.

The review stems from moderate improvements in the operating environment, the managements' continuous efforts to;

(i) restructure, enhance and better leverage the banks' franchises;

(ii) rationalise branch networks and workforce; and

(iii) increase levels of automation and use of alternative distribution channels to increase efficiency, as well as ongoing efforts to reduce the problem assets in the banks' books and cover these adequately with loan loss reserves.

This action does not affect the four banks' long-term foreign currency deposit ratings, which are placed at the B3 ceiling for such deposits in Pakistan and carry stable outlooks.

The following ratings are affected by this action:

— Habib Bank Limited Financial Strength Rating of E

— Muslim Commercial Bank Ltd. Financial Strength Rating of E+

— National Bank of Pakistan Financial Strength Rating of E+

— United Bank Limited Financial Strength Rating of E

The review will focus on an analysis of the intrinsic financial strengths of the four banks and the influence of the operating environment.

Areas of special attention will include, but will not be limited to;

(i) impacts of the extensive restructuring, modernisation and rightsizing efforts on the banks' franchises;

(ii) viability of the banks' future expansion/development strategies;

(iii) assessment of future NPL trends and provisioning requirements; and

(iv) analysis of sustainability of the recent improvements in the banks' profitability, efficiency, capitalisation and liquidity.

All four banks are headquartered in Karachi, Pakistan.

Habib Bank Limited reported total IAS-consolidated assets of PKR 403.0 billion (US $6.91 billion) at 31 December 2002.

Muslim Commercial Bank Ltd reported total IAS-unconsolidated assets of PKR 235.1 billion (US $4.03 billion) at 31 December 2002.

National Bank of Pakistan reported total IAS-consolidated assets of PKR 415.1 billion (US $7.24 billion) at 31 December 2001.

United Bank Limited reported total IAS-consolidated assets of PKR 168.6 billion (US $2.94 billion) at 31 December 2001.

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