Press Release
JCR-VIS Reaffirms Ratings of Tameer Microfinance Bank Ltd at A+/A-1
Karachi, April 17, 2015: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Tameer Microfinance Bank Limited (TMBL) at ‘A+/A-1’ (Single A Plus/A-One). Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on April 23, 2014.
The assigned ratings take into account the risk adjusted capitalization level of TMBL and sound liquidity profile. The ratings also derive strength from the implicit support of primary sponsor, Telenor Pakistan Limited (TPL), a key player in Pakistan’s telecom industry. TPL is a wholly owned subsidiary of Telenor Group (TG) having a rating of ‘A/A-2’ by an international rating agency.
Deposits are the major source of funding for TMBL, with the bank having the largest market share in terms of deposits in the micro finance sector. The bank has continued to depict growth in deposits with notable improvement in deposit mix and concentration level; there has also been significant reduction in deposit cost in FY14. Overall, liquidity profile of the bank is considered sound drawing strength from the improving granularity in deposit mix and sizeable liquid assets in relation to deposits and borrowings.
The bank depicted moderate growth in advances, which emanated from Equal Monthly Installment (EMI) loans. Proportion of the same is projected to grow notably in the on-going year. This strategy is being pursued to address the high attrition rate and hence cost associated with maintaining outstanding balance of collateralized loans, which hitherto dominated the bank’s loan mix. The bank’s exposure to counterparty risk will also evolve in line with the changing portfolio mix while controls will be tested as the bank continues to expand unsecured lending. Portfolio quality indicators have so far remained sound with PAR-30 under 1% in FY14.
Capitalization levels continue to improve in line with the growth in earnings, which have been retained by the bank. Growth in lending operations and reduction in deposit cost has positively contributed to growth in core earnings. The bank’s Branchless Banking (BB) operations are also a meaningful source of non-markup income. With the advent of new players in the market, Easy Paisa’s (EP) market share has experienced some dilution on a timeline basis.
For further information on this rating announcement, please contact the undersigned (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 604) at 021-35311861-70 (10 lines) or fax to 021-35311873.
Javed Callea
Advisor
Applicable Rating Criteria:
Microfinance Institutions (October 2003)
http://www.jcrvis.com.pk/images/MicroFinance.pdf