Press Release

VIS Reaffirms Entity Ratings of First Credit and Investment Bank Limited

Lahore, February 26 2024: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of First Credit and Investment Bank Limited (FCIBL) at ‘A/A-2’ (Single A/A-Two). Medium to long-term rating of ‘A’ signifies good credit quality Protection factors are adequate. Risk factors may vary with possible changes 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. Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on December 30, 2022.

FCIBL is a Non-Banking Finance Company (NBFC) with non-deposit taking status and its primary operations include the provision of funded and non-funded based facilities and advisory services. The assigned ratings incorporate the strong sponsorship profile of the company with two government-owned entities, namely, National Bank of Pakistan (NBP) and Water and Power Development Authority (WAPDA), having majority shareholding.

Overall FCIBL’s profitability profile is characterized by thin spreads, income earned on government securities and reversals in diminution of long-term investments. Bottomline has continued to remain suppressed due to higher markup costs incurred. During 1H’FY23, the company changed its investment mix, based on the expectation of stable or potentially decreasing interest rates in the future, while maintaining minimal credit risk profile. Further, a substantial amount of fixed coupon PIBs (with lower yield) will be maturing during third quarter of year 2024, with favorable implications for profitability. These trends have favorable implications for full year profitability. Amid economic uncertainty, the bank also streamlined its lending strategy by reducing its advances portfolio and adopting a prudent approach on disbursing loans.

Moreover, leverage indicators in FY23 improved due to overall lower repo borrowings. The forecasted performance indicates a challenging landscape for the company in achieving its profitability objectives. Going forward, the ratings will remain dependent on the company’s ability to enhance access to cost-effective funds and its profitability in line with the ambitious targets while maintaining leverage indicators within acceptable limits.

For further information on this rating announcement, please contact the undersigned at 021-35311861-64 (Ext. 207) or email at info@vis.com.pk


Maimoon Rasheed
Director

Applicable Rating Criteria: NBFC’s (March 2020)
https://docs.vis.com.pk/docs/NBFCs202003.pdf

VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

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 2024 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .