Press Release

JCR-VIS Assigns Positive Outlook to Khushhali Bank Limited

Karachi, April 23, 2014: JCR-VIS Credit Rating Company Limited (JCR-VIS) has maintained the medium to long term entity rating of Khushhali Bank Limited (KBL) at ‘A’ (Single A) and short term rating at ‘A-1’ (A-One). Outlook on the assigned ratings has been revised from ‘Stable’ to ‘Positive’.

The ratings incorporate the profile of sponsors, with shareholding largely vested with a UBL (United Bank Limited) led consortium of reputable international funds. The bank has a strong governance infrastructure and benefits from the diversity of experience of its Board members.

KBL has the largest market presence amongst other banks in the microfinance sector with a branch network spread across all provinces of the country. Since acquisition by current sponsors, KBL has embarked upon an aggressive growth driven strategy which entails product mix diversification. While KBL continued to cater to rural and urban markets through its core group lending product, the bank also scaled up its secured portfolio to diversify its loan book; secured loans represented one-fourth of the total portfolio at end-FY13. Portfolio quality indicators have remained intact and rate of incremental infection has also tapered off in 2013. Over the long term, the bank plans to establish its presence in the Micro, Small and Medium Enterprise (MSME) segment, which is largely untapped. The resilience of internal control systems will be tested further as the bank forges ahead with its growth plans in new markets and products.

The bank also posted growth in deposits in the out-going year though deposit mix witnessed less than desired changes in terms of concentration levels and cost. During the on-going year, the management’s focus will remain on improving deposit mix. A diversified deposit mix may be a more sustainable source of funding over the long term.

Core earnings of the bank have depicted notable improvement in the out-going year on the back of growth in lending operations. Optimizing the cost infrastructure, both in terms of funding and human resources will be important in achieving sustained improvement in profitability. Meanwhile, maintaining portfolio quality indicators is considered essential.

For further information on this rating announcement, please contact Mr. Rashid Zahir at or Mr. Maimoon Rasheed at 042-36610681-84.

Jamal Abbas Zaidi
Deputy CEO

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

JCR-VIS Credit Rating Company Limited