Press Release
VIS Maintains Ratings of First Paramount Modaraba at BBB/A-3
as rating analysis.
VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of First Paramount Modaraba (FPM) at ‘BBB/A-3’ (Triple B/A-Three). The long-term rating of ‘BBB’ denotes adequate credit quality with reasonable protection for timely payment of financial obligations. The short-term rating of ‘A-3’ denotes adequate liquidity with reasonable protection for timely payment of current financial obligations. Outlook on the assigned ratings is ‘Stable’.
The ratings assigned to FPM take cognizance of its established position in the Modaraba sector, its conservative lending strategy, and its viable portfolio composition. FPM’s portfolio is largely comprised of Murabaha and Musharaka financing. In FY22, Murabaha financing constituted 66% of overall financing portfolio, while Musharaka constituted 27%. The ratings also take into account FPM’s sizable equity base which stood at Rs 214.9 million at end FY22.
Focusing on its capital adequacy, FPM’s CAR ratio is at 8.6% which is well above the regulatory requirement of 8%. The Company’s ability to generate funds through issuance of Certificate of Musharaka (COMs) however, is limited due to the cap imposed by the regulator. FPM’s asset quality has remained satisfactory with gross NPLs at 1.3% at end FY22. The ratings also draw comfort from FPM’s in-house ventures which have contributed significantly to its top-line.
For further information on this rating announcement, please contact Mr. Zain Zafar (zain.zafar@vis.com.pk) or the undersigned at 021-35311861-70 or email at info@vis.com.pk.
Javed Callea
Advisor
Applicable Rating Criteria: Non-Bank Financial Companies (March 2020)
http://www.vis.com.pk/kc-meth.aspx