Press Release

JCR-VIS reaffirms entity ratings of First National Bank Modaraba at A+/A-1

Karachi, July 08, 2011: JCR-VIS Credit Rating Company Limited has reaffirmed the entity ratings of First National Bank Modaraba (FNBM) at ‘A+/A-1’ (Single A Plus / A-One). Outlook on the medium to long term rating is ‘Stable’.

The ratings incorporate implicit support of National Bank of Pakistan (NBP) through National Bank Modaraba Management Company Limited, a wholly owned subsidiary of NBP. Over the years, FNBM has maintained a low infection rate. In the absence of any sizable investment portfolio, the modaraba’s strong collection history has allowed it to timely service its obligations. Furthermore, FNBM has sufficient backup credit lines that have been utilized from time to time.

Given equity constraints, growth has remained compromised. Apart from internal factors, the phenomenon is also attributable to a difficult lending environment where a prudent approach is necessary to maintain sound asset quality. The proposed equity injection of Rs. 500m by NBP will remain critical to fuel growth and allow the modaraba to leverage its position as an active market player.

Profitability indicators improved in FY10 due to better spreads on the back of a favorable pricing strategy amidst rising interest rate regime. The initiative to bring independent members on board is likely to improve oversight and strengthen the internal control mechanism.

For further information on this rating announcement, please contact Ms. Sobia Maqbool, CFA at 021-35311861 (Ext: 506) or Mr. Maimoon Rasheed at 042-36610681 or fax to 021-35311873.

Faheem Ahmad
President & CEO

Information herein was obtained from sources believed to be accurate and reliable; however, JCR-VIS Credit Rating Company Limited (JCR-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. JCR-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. JCR-VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings. JCR-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 2011 JCR-VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to JCR-VIS.

JCR-VIS Credit Rating Company Limited