Press Release
VIS Reaffirms Entity Ratings of House Building Finance Company Limited (HBFC)
Karachi, June 27, 2025: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of House Building Finance Company Limited (‘HBFC’ or ‘the DFI’) at ‘AAA/A1+’ (Triple A/A-One Plus). Medium to long term rating of ‘AAA' indicates highest credit quality; the risk factors are negligible, being only slightly more than for risk-free Government of Pakistan’s debt. Short-term rating of ‘A1+’ denotes strongest likelihood of timely repayment of short-term obligations with outstanding liquidity factors. Outlook on the assigned ratings is ‘Stable.’ Previous rating action was announced on June 04, 2024
House Building Finance Company Limited (‘HBFC’ or ‘the DFI’) is a Development Finance Institution (DFI) engaged in financing for construction and purchase of houses. The DFI was established in 1952 by the Government of Pakistan (GoP). It was corporatized in 2006 and is now an unlisted public limited company. The DFI is operating with a network of 51 branches, 3 Regional offices and a Head-office based in Karachi.
House Building Finance Company Limited (‘HBFC’ or ‘the DFI’) is owned by the Government of Pakistan (GoP) directly and indirectly through State Bank of Pakistan (SBP). The sovereign ownership of HBFC, along with historically demonstrated track record of financial support to the entity, translates in strong sponsor profile, which has been incorporated in to the assigned rating.
The DFI’s capital adequacy remains strong, well above regulatory thresholds, supported by healthy internal capital generation. Liquidity indicators also exhibit strength, driven by a highly secure investment portfolio predominantly comprising floating government securities, ensuring minimal credit and market risk. The asset mix has shifted further towards liquid investments, enhancing the institution’s ability to meet its short-term obligations comfortably.
Despite a contraction in the financing portfolio amid a cautious lending approach during the ongoing privatization process, overall asset quality has remained stable, with no material deterioration in the non-performing indicators. Profitability has moderated due to narrowing interest spreads; however, net interest income has grown on the back of a larger earning asset base, and operating efficiency has improved owing to disciplined cost controls. These dynamics have kept the overall financial profile sound.
Strategic initiatives, including human resource expansion, IT upgrades, and product development, are expected to support future growth, particularly as operational constraints are lifted post-privatization.
For further information on this rating announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria:
Government Supported Entities
https://docs.vis.com.pk/docs/Meth-GSEs202007.pdf
Financial Institution
https://docs.vis.com.pk/Methodologies%202024/Financial-Institution-v2.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf