Press Release

VIS Maintains Entity Ratings of Trust Modaraba

Karachi, February 17, 2021: VIS Credit Rating Company Ltd. (VIS) has maintained the entity ratings of ‘BBB-/A-3’ (Triple B Minus/A-Three) assigned to Trust Modaraba (TM). The rating signifies adequate credit quality. Protection factors are reasonable and sufficient while risk factors are considered variable if changes occur in the economy. Previous rating action was announced on August 27, 2019.

The outlook on the assigned rating has been revised to ‘Stable’. This revision in outlook takes into account lower credit risk exposure on a timeline, and improvement in gross infection ratio; this mainly emanated from settlement on a few non-performing accounts. Furthermore, profitability indicators have depicted notable improvement on the back of the upswing in equity market, as a result of which the company’s efficiency ratio has improved.

TM’s ratings remain constrained on account of protracted delays in reinforcement of capital buffers. The management remains committed to reinforcing the capital base of the company, with potential merger with other Modaraba companies also being on the cards. Steps have also been taken to participate in micro-finance activities, for which regulatory approvals are being completed.

Despite the drop in non-performing portfolio, in absolute terms, gross infection is considered to be on the higher side. Notwithstanding the recent upsurge in profitability, which mainly emanated from equity market gains, future outlook on profitability is depressed, in view of the sizable portfolio of non-performing assets. The assigned ratings remain dependent on infection ratio, while VIS will continue to track management efforts to reinforce capital buffers.

For further information on this rating announcement, please contact the undersigned or Mr. Arsal Ayub, CFA (Ext: 214) at 92-21-35311861-70 or fax to 92-21-35311872-3.



Faryal Ahmed Faheem
Deputy CEO

Applicable Rating Criteria: Non-Bank Financial Companies (March 2020)
http://vis.com.pk/kc-meth.aspx

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