Press Release

Ratings of First National Bank Modaraba

Karachi, December 31, 2013: JCR-VIS Credit Rating Company Limited (JCR-VIS) has revised the medium to long-term entity rating of First National Bank Modaraba (FNBM) from ‘A+’ (Single A Plus) to ‘A’ (Single A) while maintaining the short-term rating at A-1 (A-One). Outlook on the medium to long term rating has been changed from ‘Negative’ to ‘Stable’.

The ratings draw strength from the implicit support of National Bank of Pakistan (NBP) which owns National Bank Modaraba Management Company Limited, the management company of FNBM. In addition to name sharing, credit lines have also been made available from NBP.

Historically, lending portfolio of FNBM had featured manageable level of infection. In FY12 & FY13, the modaraba experienced a rise in infection, particularly in its murabaha portfolio. Provisioning requirements against non-performing exposures resulted in a loss in FY13. In order to maintain the risk profile of the institution, external equity injection may be required. Fresh equity injection may also be required to pursue growth in future as leverage indicators have trended upwards.

Liquidity profile of the modaraba was adversely affected by the increase in non-performing assets. The availability of un-utilized credit lines provides some comfort to the liquidity assessment. At end FY13, a larger proportion of funding comprised Certificates of Musharakah, which the company has been able to raise at lower cost vis-à-vis bank credit lines.

For further information on this rating announcement, please contact the undersigned at 021-35311861-70 (Ext. 501) or Mr. Maimoon Rasheed at 042-36610681-84 or fax to 021-35311873.

Javed Callea

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 2014 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