Press Release

JCR-VIS reaffirms rating of First National Bank Modaraba at A- / A-2 with a ‘Positive’ outlook

Karachi, April 5, 2006: JCR-VIS Credit Rating Company Limited has re-affirmed the medium to long-term rating of First National Bank Modaraba at ‘A-’ (Single A minus) with a ‘Positive’ outlook. The short-term rating has also been reaffirmed at A-2 (A-Two).

The rating agency has incorporated the management’s effort to maintain quality of its financing portfolio while having achieved substantial growth during the period. The modaraba managed to increase its asset base from Rs. 630.88m as at September 2004 to Rs. 1.71b as at December 31, 2005 with growth manifested in its core financing portfolio. The quality of financing has remained sound with minimal infection in the portfolio. However, since this growth has been largely financed through borrowings, leverage has increased significantly and stood at a substantial level. Further as the modaraba has primarily targeted corporate borrowers for growth, its client concentration is high. Although the quality of assets is sound, spreads are generally lower due to intense competition in this market segment that has had an impact on the returns generated by the modaraba.

The rating agency has also incorporated the support implied by the presence of National Bank of Pakistan as a major stakeholder in the modaraba, by virtue of its management company being a wholly owned subsidiary of the bank. The modaraba, however, functions as an independent entity with its own organizational structure in place and has developed a well qualified management team.

For further information on this rating announcement, please contact Syed Zia-ud-din Ahmed or Ms. Sabeen Saleem at 5671822/5671833/5680996 or fax to 5681105/5671600.

Faheem Ahmad
President & 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 2006 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