Grant Thornton Anjum Rahman, a reputable firm of Chartered Accountants, has raised significant concerns regarding the financial viability of Silkbank Limited.
In their Independent Auditors’ Report, the firm has pointed out material uncertainty regarding Silkbank’s ability to continue as a going concern.
According to the auditors, Silkbank reported a net loss of Rs 13.04 billion for the year ending December 31, 2025, compared to Rs 12.79 billion in the previous year. These losses have led to accumulated deficits reaching Rs 64.7 billion as of December 31, 2024, a sharp increase from Rs 51.64 billion in the prior year. Additionally, Silkbank’s negative net equity stands at Rs 38.22 billion, worsening from Rs 26.35 billion recorded in 2023.
The auditors have emphasized that Silkbank’s financial metrics, including its paid-up capital (net of losses), Capital Adequacy Ratio (CAR), and Minimum Capital Requirement (MCR), fail to meet the regulatory thresholds mandated by the State Bank of Pakistan (SBP) as of December 31, 2024. These deficiencies raise serious concerns about Silkbank’s ability to meet its financial obligations and sustain operations in the long run.
Furthermore, the report draws attention to an impending amalgamation of Silkbank with and into United Bank Limited (UBL), as detailed in note 1.4 of the financial statements. However, this merger remains contingent upon obtaining all necessary regulatory approvals and fulfilling legal requirements, including securing the sanction of the Scheme of Amalgamation from the SBP. Until these approvals are granted, the uncertainty surrounding Silkbank’s future remains unresolved.
Adding to Silkbank’s financial distress, the auditors have highlighted legal claims amounting to Rs 1.06 billion against the bank, as noted in section 26.3 of the financial statements. Additionally, multiple lawsuits for damages totaling Rs 25.60 billion have been filed against Silkbank by various borrowers and employees over disputes related to loans and advances. These legal challenges further compound Silkbank’s precarious financial position.
Given these factors, Grant Thornton Anjum Rahman has underscored a material uncertainty regarding Silkbank’s ability to continue its operations. The bank’s fate largely depends on the success of its proposed merger with UBL and the resolution of its mounting financial and legal challenges. Until then, Silkbank remains in a critical state, requiring urgent intervention and strategic measures to stabilize its position in Pakistan’s banking sector.
