Press Release

VIS Assigns Initial Entity Ratings to GoldFin Limited

Karachi, December 19, 2024: VIS Credit Rating Company Limited (‘VIS’) assigns initial entity ratings of ‘A-/A2’ (Single A Minus/A Two) to GoldFin Limited ('GoldFin' or the 'NBFC'). 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 'A2' indicates good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned ratings is ‘Stable’.

GoldFin Limited is a licensed Non-Banking Finance Company (NBFC) specializing in Investment Finance Services (IFS). Originally incorporated as a Private Limited Company in Pakistan on February 17, 2020, under the Companies Act, 2017, it transitioned to a Public Limited Company on July 6, 2022, and was granted an IFS license in June 2023. The company’s registered office is located at 264, Street 16, Sector AA, DHA Phase 4, Lahore, while its operational head office is at 280 Khursheed Plaza, Maulana Shaukat Ali Road, Kot Lakhpat, Lahore.

GoldFin focuses on providing secured gold-backed loans (GBL) as its core business. This unique business model centers on leveraging the intrinsic value of gold as collateral, effectively reducing credit risk while offering accessible financing solutions to both individual and enterprise clients. In addition to directly serving its own clients, GoldFin has strategically positioned itself as a platform for banks and other financial institutions, facilitating partnerships that allow these entities to extend GBL products to their customer base. Assigned ratings take into account the governance framework bolstered by a seasoned Board and Management represented by sponsor directors with substantial experience in microfinance and gold-backed lending. This leadership foundation remains instrumental in navigating the challenges of the early growth phase and in establishing a strong operational and compliance framework.

GoldFin Limited has achieved a stable start in its first year of full-scale operations, marked by a growing loan portfolio, supported by investment from Insitor, Impact Fund Manager. This growth is further reinforced by timely loan recoveries, with no non-performing loans reported to date, underscoring the secured, gold-backed nature of its lending model. However, as GoldFin scales, safeguarding asset quality will remain crucial in managing credit risk effectively. In the context of gold-backed lending, the average loan size of Rs. 280,000 is considered manageable due to its relatively modest scale, facilitating efficient liquidation of pledged gold collateral and ensuring timely recovery in the event of default. However, a substantial increase in loan size would necessitate a reassessment of risk to mitigate potential exposure.

Profitability metrics reflect encouraging early-stage performance, driven by revenue from markup-bearing assets and returns from partnership-based models. Operational expenses remain consistent with GoldFin's initial growth phase, resulting in a positive bottom line that indicates early operational self-sufficiency. GoldFin’s liquidity and capitalization profiles are currently adequate, supported by sponsor advances earmarked for equity conversion in the future. However, future growth remains underpinned on building a diversified funding base. To this end, GoldFin’s management plans to expand the capital base through potential institutional borrowings and structured financial instruments. Looking ahead, the successful execution of GoldFin’s growth strategy, including portfolio expansion, maintaining asset quality, and diversifying funding sources, will be critical for ratings.

For further information on this ratings announcement, please contact on 021-35311861-64 or email at info@vis.com.pk.


Applicable Rating Criteria:

Non-Bank Financial Companies
https://docs.vis.com.pk/Methodologies%202024/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 .