Press Release

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

Karachi, November 14, 2012: JCR-VIS Credit Rating Company Limited has maintained the entity ratings of First National Bank Modaraba (FNBM) at ‘A+/A-1’ (Single A Plus/A-One).

The assigned ratings draw comfort from the sponsor profile, with the modaraba management company being a wholly owned subsidiary of National Bank of Pakistan (NBP). The modaraba has also been able to mobilize deposits by issuing Certificates of Musharaka to institutions and high net worth individuals. Broad based depositor profile may however still take some time to develop.

While liquid assets to deposits and borrowings remain negligible, the modaraba has un-utilized credit lines available from various financial institutions, including NBP. In prior years, sound asset quality has also provided comfort with respect to the company’s liquidity position. Accretion of fresh NPLs raises some concerns as regards the same. While net infection ratio still remains modest, net NPLs are considered on the higher side in relation to equity of FNBM. The modaraba was able to recover cash from some financially distressed clients while negotiating restructuring terms with others.

Debt leverage has trended upwards over time. Equity injection is required to improve the financial risk profile of the modaraba. In view of the above, Outlook on the rating has been revised from ‘Stable’ to ‘Negative’.

For further information on this rating announcement, please contact Ms. Sobia Maqbool, CFA at 021-35311861-70 (Ext. 506) or Mr. Maimoon Rasheed at 042-36610681-84 or fax to 021-35311873.

Jamal Abbas Zaidi
Deputy 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 2012 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