Press Release

VIS Credit Rating Company Upgrades Entity Ratings of Trust Modaraba

Karachi, April 26, 2022: VIS Credit Rating Company Ltd. (VIS) has upgraded the entity ratings of Trust Modaraba (TM) from ‘BBB-/A-3’ (Triple B Minus/A-Three) to ‘BBB+/A-2’ (Triple B+/A-Two). Outlook on the assigned ratings is ‘Stable’. Long-term entity rating of BBB+ reflects adequate credit quality; protection factors are reasonable and sufficient. Risk factors are considered variable if changes occur in the economy. Short-term rating of A-2 signifies good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small. Previous rating action was announced on February 17, 2022.

The revision in ratings takes into account growth in financing portfolio along with improvement in credit quality of the same. Other contributing factors include growth in operating revenue and enhanced operational efficiency. Ratings positively factor in managements concerted efforts against portfolio in litigation. Gains against recoveries provided TM room for growth which eventually led to increased profitability in FY21 and 1HFY22. Going forward, management expects further recoveries in the pipeline, which will help to boost overall earning profile of the Modaraba.

Assigned ratings incorporate the change in business strategy whereby management has increased its focus towards corporate clients and high net worth individuals, which have a relatively lower risk of default. As a result of the same, the non-performing portion of the portfolio has significantly reduced. Furthermore, with improved profitability, provisioning coverage was reported on the higher side in the outgoing year. However, the same continues to be on the lower side as compared to peers. Comfort is drawn from sizeable collateral held against advances. Going forward, management plans to increase the number of sectors that it caters to by entering the segment of low cost housing with minimal risk. Given the aforementioned growth factors and expected recoveries, profitability is projected to improve. With no outstanding borrowings, TM’s leverage indicators continue to remain on the lower side. Management remains committed to reinforcing the capital base of the Modaraba, for which various opportunities are being explored. Enhancement in financing portfolio to achieve the projected profitability while maintaining asset quality will be important for the assigned level of ratings.

For further information on this rating announcement, please contact Ms. Asfia Aziz or the undersigned (Ext: 207) at 92-21-35311861-70 or email to .

Sara Ahmed

Applicable Rating Criteria: Non-Bank Financial Companies (March 2020)

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2022 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

VIS Credit Rating Company Limited