Press Release

JCR-VIS Reaffirms Entity Ratings of Khushhali Bank Limited at A/A-1
 

Karachi, April 30, 2013: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Khushhali Bank Limited (KBL) at ‘A/A-1’ (Single A/A-One) with a ‘Stable’ Outlook.

In June 2012, a consortium led by United Bank Limited (UBL) and comprising four global funds acquired 67.4% equity stake in KBL. Post acquisition, UBL owns 29.7% stake in KBL. Following changes in shareholding, the Board has been reconstituted which brings in diversified international experience in the field of microfinance, banking operations and corporate governance.

KBL is the largest Microfinance Bank in Pakistan in terms of its countrywide network of 106 branches. During 2012, balance sheet of KBL grew by 21% over prior year as deposit mobilization picked pace. The balance sheet of KBL is funded through a mix of retail deposits and long term borrowing from Asian Development Bank which is gradually being retired. In terms of deposits, KBL continues to be the third-largest microfinance bank in the industry; its share in industry’s deposits has increased to 17.4%. Maturity profile of deposits has also slightly extended with introduction of longer-tenor, price-competitive deposit products. While retail deposits comprised three-fourth of the deposit base, share of institutional depositors has increased on a timeline basis and resulted in greater concentration in deposit mix. Capitalization level of the bank has remained sound.

In terms of gross loan portfolio, KBL has the second largest market share in the micro-finance sector. The bank has initiated secured lending, the proportion of which is proposed to increase on a timeline basis. Portfolio quality indicators of the bank have witnessed improvement vis-a-vis prior year as portfolio at risk > 30 days comprised only 1.4% of total loan portfolio and net infection was 1.1% at the year end-2012.

Overall profit of the bank was higher in 2012. On a timeline basis, operational performance of the bank has witnessed slight weakening due to full year cost impact of branch conversion program to ‘full service branches’ undertaken in prior year. Business plan of KBL entails leveraging the balance sheet to augment core lending activities. The management is projecting significant increase in profits in 2013 on the back of growth in scale of operations

For further information on this rating announcement, please contact Mr. Rashid Zahir at rashid.zahir@jcrvis.com.pk or Ms. Sobia Maqbool, CFA (Ext: 604) at 02135311861-70.




Jamal Abbas Zaidi
Deputy CEO

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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 2013 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