Press Release

JCR-VIS Reaffirms Entity Ratings of Pak Oman Microfinance Bank Limited

Karachi, April 29, 2014: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Pak Oman Microfinance Bank Limited (Pak-Oman) at ‘BBB+/A-3’ (Triple B Plus/A-Three). Outlook on the assigned rating is ‘Stable’.

The assigned ratings take into account the sponsor profile, with the Sultanate of Oman having a direct stake of 66.5% in the bank. The remaining shares are held by Pak-Oman Investment Company Limited, having an outstanding rating of ‘AA+/A-1+’. In 2013, the sponsors injected Rs. 150m of fresh capital in the bank; this was however not sufficient to meet the Minimum Capital Requirement (MCR) of Rs. 1b stipulated for micro-finance banks having nation-wide operations, for year-end 2013. Sponsors have agreed in principal to inject additional equity of Rs. 250m in the bank and the decision awaits approval from the Sultanate of Oman. Meanwhile, the management has requested the State Bank of Pakistan to extend the relaxation for meeting MCR till June 30, 2014.

Capital Adequacy Ratio (CAR) of the bank is much higher than the regulatory threshold as core lending activities have so far remained restricted. Assets are mostly parked in avenues having low to minimal exposure to credit risk. A three year Strategic Business Plan has recently been approved by the Board which envisages growth in lending operations. The execution of business plan would require institutional capacity building; as per independent evaluations, there are notable gaps in the bank’s control infrastructure. Moreover, there have been significant delays in the implementation of core IT system. Several senior management level positions are held by personnel having acting charge.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 604) at 35311861-70 or fax to 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 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