Press Release

JCR-VIS Reaffirms Ratings of Kashf Foundation

Karachi, July 12, 2011: JCR-VIS Credit Rating Company Limited has reaffirmed the entity ratings of Kashf Foundation (Kashf) at ‘BBB/A-3’ (Triple B /A-Three).
Kashf continued to recover from the wave of delinquencies that affected its portfolio in 2008, subsequent to which, Kashf virtually halted all its lending activities. In view of the adverse group dynamics faced by the institution, the lending methodology has been revised with each client now dealing with representatives of Kashf directly. As a result, group size has now reduced substantially. Fresh disbursements are largely being made to existing clients on prudent basis by adopting stringent appraisal and monitoring techniques vis-à-vis the previous lending methodology. JCR-VIS will continue to track the results of revised underwriting guidelines for impact on future asset quality. So far, the institution has reported healthy recovery from lending undertaken recently.
Given its size, the foundation would have to build a sizable performing portfolio to sustain its operational cost. Kashf has negotiated grants from multiple donor agencies, which should help absorb some operating costs. In the past also, Kashf had been the recipient of donor funds which had allowed the foundation to build equity, in the absence of any equity contribution by sponsors, given the legal structure under which Kashf operates.
The phase of collective defaults however still has a drag on the foundation’s financial health. Equity is negative on account of full provisioning against the delinquent portfolio as progress on recoveries remains slow. In view of the above, ratings continue to be placed under ‘Rating Watch-Developing’ status. JCR-VIS will monitor cash flows and the progress towards strengthening the equity position on an on-going basis.
For further information on this rating announcement, please contact Ms. Sabeen Saleem, CFA (Ext: 510) or Ms. Sobia Maqbool, CFA (Ext: 506) at 35311861-70 (10 lines) or fax to 35311872-3.

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