JCR-VIS maintains entity ratings of First National Bank Modaraba at A+/A-1

Karachi, November 15, 2012 (PPI-OT): JCR-VIS Credit Rating Company Limited has maintained the entity ratings of First National Bank Modaraba (FNBM) at ‘A+/A-1’ (Single A Plus/A-One).

The assigned ratings draw comfort from the sponsor profile, with the modaraba management company being a wholly owned subsidiary of National Bank of Pakistan (NBP). The modaraba has also been able to mobilize deposits by issuing Certificates of Musharaka to institutions and high net worth individuals. Broad based depositor profile may however still take some time to develop.

While liquid assets to deposits and borrowings remain negligible, the modaraba has un-utilized credit lines available from various financial institutions, including NBP. In prior years, sound asset quality has also provided comfort with respect to the company’s liquidity position.

Accretion of fresh NPLs raises some concerns as regards the same. While net infection ratio still remains modest, net NPLs are considered on the higher side in relation to equity of FNBM. The modaraba was able to recover cash from some financially distressed clients while negotiating restructuring terms with others.

Debt leverage has trended upwards over time. Equity injection is required to improve the financial risk profile of the modaraba. In view of the above, Outlook on the rating has been revised from ‘Stable’ to ‘Negative’.

For more information, contact:
Mr. Javed Callea
Advisor
JCR-VIS Credit Rating Company Limited
Tel: +9221 35311861 (10 lines) (Ext: 501)
Fax: +9221 35311872-3
E mail: javed.callea@jcrvis.com.pk

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