Press Release
JCR-VIS Upgrades Entity Ratings of NRSP Microfinance Bank Limited
Karachi, April 29, 2014: JCR-VIS Credit Rating Company Limited (JCR-VIS) has upgraded the entity ratings of NRSP Microfinance Bank Limited (NRSPB) from ‘BBB+/A-3’ (Triple B Plus/A-Three) to ‘A-/A-2’ (Single A Minus/A-Two). Outlook on the assigned rating is ‘Stable’.
The assigned ratings incorporate improving market share of NRSPB as growth momentum in asset base has been higher than that of the industry. Asset growth has also propelled profitability indicators in FY13. In addition to profit retention augmenting the bank’s capital base, equity injection of Rs. 500m has been approved by the sponsors to support the bank’s expansion plans and maintain Capital Adequacy Ratio (CAR) at a comfortable level vis-à-vis regulatory requirement.
Agricultural lending is the forte of the bank and accordingly the bank has greater presence in rural areas. The loan portfolio predominantly comprises agriculture and livestock financing. While the portfolio features geographic and single product risks, a well tested lending methodology with same having been in use by NRSP for several years mitigates the associated risk to some extent. Asset quality indicators of the bank have so far remained strong.
Funding mix of the bank comprises deposits and commercial borrowings, with a higher proportion of the latter. Deposit base of the bank has posted notable growth while the proportion of mandatory savings has declined on a timeline basis. There is room for improvement in the deposit profile. Given seasonal demand for credit, liquidity management of the bank poses additional challenges with funding requirements being notably higher during peak disbursement season.
For further information on this rating announcement, please contact Ms. Sobia Maqbool, CFA (sobia@jcrvis.com.pk) or Mr. Maimoon Rasheed (maimoon@jcrvis.com.pk) at 021-35311861-70 and 042-36610681-84 or fax to 021-35311873.
Jamal Abbas Zaidi
Deputy CEO