Karachi, October 28, 2016: JCR-VIS Credit Rating Company Limited (JCR-VIS) has upgraded the entity ratings of NRSP Microfinance Bank Limited (NRSPB) to ‘A/A-1’ (Single A /A-One) from ‘A-/A-2’ (Single A Minus/ A-Two). The rating of Privately Placed Term Finance Certificate (PPTFC) has also been upgraded to ‘A’ (Single A). Outlook on the assigned rating is ‘Stable’. The previous rating action on Entity and PPTFC rating was announced on April 21, 2016 and September 21, 2016, respectively.
The ratings assigned to NRSPB takes into account growing market share of the institution and sustained improvement across key performance areas including asset quality, liquidity and internal capital generation. NRSPB is the third largest microfinance bank in the country. The ratings also take into consideration presence of reputable sponsors carrying experience and understanding of the microfinance sector. Sponsor’s commitment has been demonstrated in the recent years in the form of both technical knowledge transfer and financial support. While loan portfolio reflects product concentration, ratings draw comfort from bank’s experience and satisfactory track record in agriculture financing primarily in rural areas. Additionally, bank plans to offer high ticket individual loan products to community organization members with satisfactory repayment history. This is expected to rationalize product concentration while also increasing the average loan size.
High yielding micro credit portfolio along with declining cost of deposits and growth in earning asset led to significant growth in profitability during the ongoing year; the trend here is among the rating drivers to be tracked, going forward. Meanwhile, the bank maintains lowest overheads among peer microfinance banks. Ratings also take into account sound capital levels of the institution with bank maintaining buffer over and above the regulatory Capital Adequacy requirement. Liquidity profile is supported by adequate liquid assets in relation to deposits and borrowings.
For further information on this rating announcement, please contact the undersigned (Ext: 234) or Mr. Jamal Abbas Zaidi (Ext: 249) at 35311861-70 or fax to 35311872.
Applicable Rating Criteria:
Microfinance Banks (June 2016) (http://www.jcrvis.com.pk/kc-meth.aspx)
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