Press Release

VIS Reaffirms Entity Ratings of ASA Pakistan Limited

Karachi, April 30, 2019: VIS Credit Rating Company Limited has reaffirmed entity ratings of ASA Pakistan Limited (ASA Pakistan) at ‘BBB+/A-3’ (Triple B Plus /A-Three). The long term rating signifies adequate credit quality with reasonable and sufficient protection factors. Risk factors are considered variable if changes occur in the economy. Short term rating of ‘A-3’ depicts satisfactory liquidity and other protection factors which qualify entities / issues as investment grade. Risk factors are larger and subject to more variation. Nevertheless, timely payment is expected. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on August 18, 2018.

Assigned ratings of ASA Pakistan continue to derive strength from sponsor support received from ASA International Holding in the form of both technical and financial assistance. Similar to its group entities, ASA Pakistan has implemented the core group lending methodology. In view of its application for a Microfinance Bank (MFB) license, which has protracted, the company has begun implementing a bank related IT system. Moreover, as per management, all requirements specified by the regulator in regard to conversion have been complied with. Ratings are dependent upon conversion of the institution into a regulated entity in the ongoing year; given that business volumes have grown substantially over time desiring the entity to remain in a regulatory regime.

Current ratings of ASA Pakistan also incorporate growth in its capitalization levels and profitability indicators. With growth in its gross loan portfolio, asset quality indicators of the company slightly weakened; however, the same remain favorable in comparison to peers. Moreover, with higher quantum of advances, profitability levels of the company also increased. Ability to maintain these performance metrics will be a key rating driver. Liquidity indicators have remained low in comparison to peers on a timeline basis. Going forward, ratings of the company would remain dependent on successful transformation into a MFB, maintaining asset quality indicators, development and implementation of strong credit risk assessment and internal control systems.

For further information on this rating announcement, please contact the undersigned (Ext: 201) or Ms. Muniba Khan (Ext: 215) at 35311861-70 or fax to 35311872-3.

Javed Callea

Applicable Rating Criteria: Microfinance Banks (May 2016)

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 2019 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

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