Press Release

VIS Upgrades Entity Ratings of NRSP Microfinance Bank Limited

Karachi, May 06, 2024: VIS Credit Rating Company Limited (VIS) has upgraded the medium to long-term entity ratings of NRSP Microfinance Bank Limited (‘NRSP Mfb’ or ‘the Bank’) to ‘A-’ (Single A Minus) from ‘BBB+’ (Triple B Plus) while the short-term has been maintained at ‘A-2’ (A-Two). Medium to long term rating of ‘A-' indicates good credit quality; Protection factors are adequate. Risk factors may vary with possible changes in the economy. Short-term rating of 'A-2' indicates 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 ratings has been revised to ‘Stable’ from ‘Rating Watch – Developing.’ Previous rating action was announced on April 27, 2023.

NRSP Mfb was incorporated as a public limited, unlisted company in 2008 under the Companies Ordinance, 1984. The Bank has a license from SBP to function as a nationwide Micro Finance Bank (Mfb) under the Microfinance Ordinance, 2001. The Bank is engaged in provision of conventional and Islamic microfinance services to low-income, rural sector with the ultimate objective of poverty alleviation and promoting social welfare.

The assigned ratings of NRSP Mfb are supported by sponsors having extensive experience in the microfinance sector. The rating also incorporates an implicit government support due to the affiliation with the parent company, National Rural Support Program (NRSP). Sponsor’s commitment has historically been demonstrated by way of both technical and financial support, with a fresh infusion of equity in form of advance against right issue in 2023.

The credit risk profile of NRSP Mfb reflects an imperative need for addressing capital shortfall. The Bank has adeptly responded to evolving risk dynamics, particularly through the adoption of a consolidation strategy aimed at curbing asset quality deterioration. The Bank has witnessed a substantial reduction in non-performing loans (NPLs), translating into improved asset quality indicators. Moreover, the strategic shift towards secured lending segments like gold and housing, were effective in containing historically high infection rates.

Liquidity metrics portray an overall resilient funding base, and an uptick in liquid assets along with diversification of deposit sources. NRSP Mfb's reliance on deposits as the primary funding source remains a key strength, supplemented by prudent liquidity management practices.

The Bank's profitability trajectory exhibits marked improvement, bolstered by enhanced net markup income. Operational Self-Sufficiency (OSS) has witnessed an uptick, underscoring management's efforts towards sustainable revenue generation. However, the significant capital shortfall poses a challenge, necessitating urgent remedial actions to restore capital and meet regulatory requirements.

VIS maintains a positive view on NRSP Mfb, premised on its demonstrated resilience amidst evolving market dynamics, risk management initiatives and financial support from its sponsor along with implied government support. However, the institution's capitalization concerns warrant vigilant monitoring, despite the recent increase, with a prudent balance to be struck between growth and improving profitability and regulatory compliance requirements. The rating would remain underpinned to the planned strategy of recapitalization, portfolio quality improvement and organizational actions to sustain the road to recovery.

For further information on this ratings announcement, please contact at 021-35311861-64 or email at

Applicable Rating Criteria: Micro-Finance Banks
VIS Issue/Issuer Rating Scale

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