Press Release

VIS Reaffirms Entity Ratings of Pakistan Mortgage Refinance Company Limited (PMRC)

Karachi, April 14, 2023: VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings of Pakistan Mortgage Refinance Company Limited (PMRC) at ‘AAA/A-1+’ (Triple A/A-One Plus). Outlook on the assigned ratings is ‘Stable’. The long-term rating of ‘AAA’ indicates highest credit quality; the risk factors are negligible, being only slightly more than for risk-free Government of Pakistan’s (GoP) debt. The short-term rating of ‘A-1+’ signifies highest certainty of timely payment; Short-term liquidity, including internal operating factors and /or access to alternative sources of funds, is outstanding and safety is just below risk free GoP’s short term obligations. Previous rating action was announced on April 12, 2022.

The assigned ratings continue to remain underpinned by PMRC’s shareholding structure (public sector holding of 43.45%) and strong Government and Regulatory support. The ratings also take into account low exposure to credit & market risk, sound capitalization indicators, satisfactory policy framework, seasoned management team and strong risk management controls. Maintaining aggregate risk profile of advances and investments at levels commensurate with the assigned ratings remains an important factor.

The demand for housing finance is expected to remain sound given the housing deficit in the country. Initiatives, such as Naya Pakistan Housing Scheme and Mera Pakistan Mera Ghar have provided impetus to growth in mortgage financing. However, demand is likely to remain low in the short to medium term horizon, in view of halt in Government’s mortgage financing schemes and the monetary tightening stance of SBP. During 2022, total advances portfolio of the Company grew by 42% to Rs.33.7b. PMRC has managed to increase percentage share in Islamic advances portfolio, with percentage share of Islamic finances in total portfolio of around 42.2% as of Dec’22 vis-à-vis 22.5% as of Dec’21. Credit risk emanating from the refinancing portfolio is considered minimal on account of financing with recourse to PFIs and 25% overcollateralization on Mortgage Loan Portfolio (MLP). Exposure to market risk is considered manageable with the investment portfolio mostly comprising sovereign debt securities with maturities of less than 1 year.

Liquid asset coverage of borrowings has trended down in 2022 and was reported at 45.2% as of end-Dec’22 (Dec’21: 60.9%). The drop in the same is mainly attributable to higher financing disbursements during the period. Nevertheless, overall liquidity coverage of borrowings is viewed to be adequately high. PMRC maintains a sizeable cushion over the regulatory requirement. CAR has improved from 53.10% (as at Dec’21) to 64.10% (as at Dec’22) and is expected to remain comfortable through the rating horizon. In tandem with the growth in operations, operating expense noted an uptick of 18%. Albeit the increase in operating expenses, efficiency depicted an improvement on account of a sizeable increase in recurring income.

For further information on this rating announcement, please contact Mr. Hasan Rashid (Ext: 209) or the undersigned (Ext. 207) at 021-35311861-64 or email at

Sara Ahmed

Applicable Rating Criteria: Government Supported Entities - July 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 2023 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

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