Press Release

JCR-VIS Reaffirms Entity Ratings of Khushhali Bank Limited at A-/A-2

Karachi, April 30, 2010: JCR-VIS Credit Rating Company Limited (JCR-VIS) reaffirms the entity ratings of Khushhali Bank Limited (KBL) at ‘A-’ (Single A Minus) for the medium to long-term and A-2 (A two) for the short-term. Outlook on the medium to long-term rating is ‘Stable’.

The ratings reflect KBL’s position as one of the largest microfinance banks operating in the local MFB sector, with 107 branches set up in 86 districts of the country. Ratings draw strength from improved financial performance, sound portfolio indicators and experienced management team.

The bank was adequately liquid by way of a fully drawn credit line provided by Asian Development Bank (ADB) as part of the Microfinance Sector Development Program. The bi-annual repayment of ADB loan, stretched over a period of 12 years has commenced last year in May 2009. Consequently; the Bank has accelerated mobilization of low cost funds through the conversion of its Microcredit branches to full service banking operations. By the end of year 2009; 40 branches were converted into full service branches. While the management is endeavoring to mobilize funds through deposits and commercial borrowings; the financial expense of the bank is expected to increase and developing sustainable access to funding shall be instrumental to the bank’s long-term viability.

The growing size and operational needs of the bank have made the acquisition of an integrated core banking application software indispensable. The delay in acquisition and implementation of IBA will affect the ability of KBL to fully leverage its presence in the microfinance sector.

The bank has rolled out the process of transformation of KBL and SBP has endorsed the plan of strategic investment which will result in a complete transfer of ownership and control to the private sector. JCR-VIS will closely monitor the transition and its impact on the shareholding structure.

For further information on this rating announcement, please contact Ms. Sabeen Saleem ( or Mr. Maimoon Rasheed ( at 021-5311861 and 042-6610681-84 or fax to 021-5311873.

Faheem Ahmad
President and CEO

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited VIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2010 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.

JCR-VIS Credit Rating Company Limited