JCR-VIS reaffirms Entity Ratings of Tameer Micro Finance Bank Limited at A/A-1 with Stable Outlook

Karachi, March 27, 2013 (PPI-OT): JCR-VIS Credit Rating Company Limited has reaffirmed the entity ratings of Tameer Micro Finance Bank Limited (Tameer) at ‘A/A-1’ (Single A/A-One). Ratings of the outstanding TFC issues (1 and 2) have also been reaffirmed at ‘A(SO)’ (Single A (Structured Obligation)). Outlook on the assigned ratings is ‘Stable’.

Ratings take into account the growth in deposit base of the bank which has fuelled the growth in balance sheet footing in FY12. Considerable improvement has been noted in concentration levels of the deposit mix on a timeline basis.

Further granularity and stability in deposit mix may improve the bank’s reliance on the same as a sustainable source of funding over the long term. About one-third of the bank’s funding mix has maturity of more than one year, whereas loans fall almost entirely in the one-year bucket. This provides the bank cushion in managing its resources. Capitalization level of the bank is considered sound; improving pace of internal capital generation has been noted positively.

Tameer enjoys the largest market share in terms of gross loan portfolio in the micro-finance sector. Portfolio quality indicators of the bank remained intact, with growth in loan book primarily led by the gold backed secured product. Credit risk associated with the same is largely mitigated by way of security in addition to which revenue stream is also relatively diversified.

Nevertheless, with other market players offering similar products, diversification in the loan offering is considered important, going forward. Several new products are in pilot phase and are planned to be launched over time. Income assessment capabilities of the staff at grass root level will be further tested as new products are launched. So far, incidence of non-performance in unsecured lending has also remained low.

Profitability indicators of the bank witnessed improvement in FY12, supported by revenues generated through branchless banking services; this has allowed the bank to diversify its income stream. Quantum of deposits from the same source however remains small.

The bank is in majority owned by Telenor Pakistan Limited (TPL), which in turn is a wholly owned subsidiary of Telenor Group. The Telenor Group is amongst the largest mobile operators in the world. Financial strength of the group remains strong. The assigned rating incorporates implicit support from the sponsor.

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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