Press Release

VIS Maintains Ratings of Rural Community Development Programmes

Karachi, April 29, 2022: VIS Credit Rating Company Limited (VIS) has maintained entity ratings of Rural Community Development Programmes (RCDP) at ‘BBB/A-3’ (Triple B/A-Three) while outlook on the assigned ratings has been revised from ‘Rating Watch-Developing’ to ‘Stable’. The medium to long-term rating of ‘BBB’ denotes adequate credit quality coupled with reasonable protection factors. Moreover, risk factors are considered variable if changes occur in the economy. The short-term rating of ‘A-3’ denotes satisfactory liquidity and other protection factors. Risk factors are larger and subject to more variation. Nevertheless, timely payment is expected. The previous rating action was announced on April 29, 2021.

The ratings assigned to RCDP take into account implicit support available from the parent organization, Rural Community Development society (RCDS) both on financial and technical fronts. Despite support from other income which mainly includes present value adjustment on unwinding of microcredit revolving loan and net exchange gain and profit on investments, net profit decreased on account of contraction in spreads, higher provisioning charge and write-offs during FY21. Meanwhile, net profit declined further in HY22 amidst considerable increase in write-offs and operating expenses. The infection ratios depicted some improvement with lower NPLs along with growth in portfolio during HY22. Meanwhile, the liquidity indicators have remained adequate as RCDP has maintained considerable liquid assets in relation to outstanding debt obligations on a timeline basis. The capital adequacy ratio has also remained sizeable, reflecting sufficient room for growth.

The institution has envisaged network expansion by adding a certain number of branches in each of the next five years. While enhancing existing loan facilities, the management also plans to tap capital markets in order to finance its expansion plans. Bottomline is expected to remain depressed during the ongoing year primarily due to higher operating expenses. As per management, the expected growth in loan book along with rationalization of operating expenses is likely to result in building a sustainable income stream for the institution, going forward. Meanwhile, ratings will remain dependent on improvement in asset quality indicators, managing spreads, liquidity and capitalization indicators while achieving projected growth in disbursements, going forward.

For further information on this rating announcement, please contact Ms. Tayyaba Ijaz, CFA at 042-35723411-13 (Ext. 8004) and/or the undersigned at 021-35311861-66 (Ext. 306) or email at

Faryal Ahmad Faheem
Deputy CEO

VIS Entity 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 .

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