Press Release

JCR-VIS Upgrades Entity Rating of Kashf Foundation

Karachi, March 25, 2016: JCR-VIS Credit Rating Company Limited (JCR-VIS) has upgraded the entity rating of Kashf Foundation (KF) from ‘BBB/A-3’ (Triple B/A-Three) to ‘BBB+/A-3’ (Triple B Plus/A-Three). Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on March 30, 2015.

The ratings assigned to KF takes into account ongoing improvement in the operating performance of the institution evident by improved profitability indicators on the back of growing micro credit portfolio. Ratings also draw comfort from KF’s extensive experience in the microfinance sector, a well articulated lending methodology and a sound internal control infrastructure. Sustainability in core performance along with maintaining asset quality continues to remain critical to uphold positive momentum in internal capital generation.

While Kashf Karobar Karza continues to be the flagship product, the institution is gradually building up the proportion of other products to diversify its product mix. Management decision of increasing the average loan size is viewed positively as it is expected to make KF products more competitive while also augmenting the efficiency of the institution. Spreads of the institution benefited from lower finance cost, inline with lower benchmark rates. Overheads continue to rationalize on a timeline basis while loan loss provisioning remained modest.

Liquid assets represented around one-fourth of total borrowings at end-1HFY16. Funding for the accelerated disbursement in the coming years is expected to be met mainly from existing sources while management aims to tap international markets to diversify its funding sources. With growing equity base, debt metrics have also shown improving trend though still remain on the higher side. Loan to Kashf Holdings Limited was rescheduled for the second time during the outgoing year; additional provisioning against the same may occur in the coming years.

For further information on this rating announcement, please contact the undersigned at 021-35311861-70 (10 lines) or Mr. Maimoon Rasheed at 042-35723411-13.

Jamal Abbas Zaidi

Applicable Rating Criteria: Micro Finance Institutions - Oct 2003

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 2016 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