Press Release
VIS Reaffirms Entity Ratings of Damen Support Programme
Karachi, May 23, 2025: VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings of Damen Support Programme (‘DSP’ or the ‘Institution’) at 'BBB-/A3' (Triple B Minus/A Three). Medium to long term rating of 'BBB-' indicates adequate credit quality; protection factors are reasonable and sufficient. Risk factors are considered variable if changes occur in the economy. Short term rating of 'A3' indicates fair likelihood of timely repayment of short-term obligations with satisfactory liquidity factors. Outlook on the assigned ratings remains ‘Stable.’ Previous rating action was announced on April 17, 2024.
Damen Support Programme is a spin-off of microcredit operations from its host non-profit organization - Development Action for Mobilization and Emancipation (DAMEN), registered under the Societies Registration Act, XXI of 1860, and set up to foster development at the grassroots level in Pakistan in 1992. DSP commenced operations as an independent microcredit entity in 2015, and spans a network of 64 operational branches, spread across 17 districts of Punjab.
The Institution demonstrates a stable credit profile, supported by a strong control framework, experienced leadership, and commitment to financial inclusion. The institution benefits from a well-structured Board of Directors and senior management team, led by Chairperson Ms. Naghma Rashid and CEO Mr. Asghar Ali Memon, both of whom bring extensive expertise in microfinance and community development. DSP's governance is further reinforced by strong risk management practices, including a disciplined loan approval process and stringent portfolio monitoring, which have contributed to improving asset quality over time.
The Institution's loan portfolio is diversified across sectors such as craftsmanship, trade and livestock, with a focus on group lending to mitigate credit risk, through social guarantees. While the portfolio is predominantly unsecured, DSP's emphasis on repeat borrowers with proven repayment histories enhances its risk management framework. The gradual expansion of Shariah-compliant financing also reflects adaptability to market demands.
DSP maintains a sound liquidity position, with surplus liquidity at hand, and no immediate stress on repayments due. The Institution’s capital adequacy remains strong, supported by internal surplus generation and prudent reserve management. Profitability has shown resilience, driven by improved yields on advances and effective cost management, though exposure to foreign currency borrowings introduces some volatility.
Going forward, DSP's ratings will depend on its ability to maintain strong asset quality through continued stringent portfolio monitoring and proactive client engagement. Enhancing profitability via sustainable yield management and cost optimization will also be essential. Moreover, taking proactive measures to mitigate foreign exchange volatility and strengthen capital buffers will be critical to supporting the ratings.
For further information on this rating announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria:
Non-Bank Financial Companies
https://docs.vis.com.pk/Methodologies%202024/NBFCs202003.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf