Press Release

JCR-VIS Reaffirms Entity Ratings of The First MicroFinanceBank Limited - Pakistan

Karachi, April 29, 2013: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of The First MicroFinanceBank Limited - Pakistan (FMFB-P) at ‘A/A-1’ (Single A/A-One). Outlook on the assigned rating is ‘Stable’.

The ratings take into account FMFB-P’s association with the Aga Khan Development Network through its associated concerns, along with international development finance organizations including Japan International Cooperation Agency and International Finance Corporation. The ratings incorporate implicit support from the sponsors of the bank.

FMFB-P has posted healthy profit during FY13 on the back of considerable growth in advances, cost control and higher recovery against previously written-off loans. As per the business strategy being rolled out, the management is exploring new segments with greater focus on upper end micro-enterprises, which will help in increasing average loan size; lending in urban markets is being enhanced further. Moreover, the bank has managed to reduce exposure in bullet loans on a timeline basis; the same is planned to be curtailed further. On the back of geographical diversification, portfolio quality indicators may exhibit some resilience against natural calamities, going forward. Level of future profitability will depend on timely execution of the business plan while maintaining sound asset quality.

Asset base is funded primarily through deposits which feature manageable concentration. With a sizeable amount of liquid reserves carried on balance sheet, liquidity remains adequate in relation to deposits and borrowings. Profit retention has allowed the bank to meet minimum capital requirement as stipulated by the regulator. Positive momentum in earnings is considered important to build cushion to absorb any unforeseen losses in future.

During FY13, all vacant senior management level positions were filled. The bank is in the process of identifying core banking software with the help of a consultant to replace the bank’s existing decentralized software. Timely action in this regard is considered essential, given that the bank’s scale of operations continues to grow.

For further information on this rating announcement, please contact Ms. Sobia Maqbool, CFA at 021-35311861-70 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, 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