Press Release

VIS places Entity Ratings of Trust Modaraba on ‘Rating Watch-Negative’ Status

Karachi, August 27, 2019: VIS Credit Rating Company Ltd. (VIS) has placed the entity ratings of ‘BBB-/A-3’ (Triple B Minus/A-Three) assigned to Trust Modaraba (TM) on ‘Rating Watch-Negative’ status. The rating signifies adequate credit quality. Protection factors are reasonable and sufficient while risk factors are considered variable if changes occur in the economy. Previous rating action was announced on January 26, 2018.

Change in assigned outlook takes into account further weakening in operational and financial profile of the company including continuous attrition in financing portfolio and its earning potential, high infection levels and protracted delays in the planned recapitalization of the company. While, in absolute terms, non-performing portfolio was reported slightly lower, asset quality indicators continue to remain on the higher side. Moreover, financing portfolio also depicted a declining trend on a timeline basis, given the limited sources of funding for the Modaraba. With limited financial resources to build up the portfolio, bottom line of the company was also reported significantly lower than previous years. Quality of the financing portfolio needs to be improved in order to ensure operational sustainability and growth in earnings.

Despite inherited infection in the financing portfolio, a single exposure does not exceed more than 10% of its equity base. During the outgoing years, management made concerted efforts towards recovering its infected portfolio. However, the same has been deferred on account of delay in legal proceedings. Going forward, recovery of projected NPLs and availability of fresh funding will remain key rating drivers.

For further information on this rating announcement, please contact the undersigned (Ext: 201) or Mr. Jamal Abbas Zaidi (Ext: 207) at 92-21-35311861-70 or fax to 92-21-35311872-3.

Javed Callea

Applicable Rating Criteria: Non-Bank Financial Companies (October 2017)

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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