Press Release

VIS Reaffirms Entity Ratings of Trust Modaraba

Karachi, May 13, 2024:. VIS Credit Rating Company Ltd. (VIS) has reaffirmed entity ratings of Trust Modaraba (TM) at ‘BBB+/A-2’ (Triple B+/A-Two). Outlook on the assigned ratings is ‘Stable’. Long-term entity rating of ‘BBB+’ reflects adequate credit quality; protection factors are reasonable and sufficient. Risk factors are considered variable if changes occur 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. Previous rating action was announced on May 05, 2023.

Trust Modaraba (TM) is managed by Al-Zamin Modaraba Management (Private) Limited (AZMM). TM is currently engaged in Diminishing Musharakah, Ijarah, Morabaha, Mushrakah, and equity market operations. Financing portfolio continues to dominate the asset mix of the Modaraba. Assigned ratings take note of noticeable growth trend in the financing portfolio in FY23 based on prudent growth stance adopted by the management amidst heightened credit risk environment. At the same time, focus remained on corporate and high net worth individuals for portfolio growth while streamlining SME exposures. Resultantly, credit quality profile of the Modaraba has improved.

Ratings also take into account managements concerted efforts for recovery from the litigated portfolio. A one off settlement gain in the year 2021-2022 provided profitability boost to the Modaraba. FY23 reported a marginal loss on account of losses arising from the investment portfolio. In the current year, profitability depicts improvement on the back of redeployment of funds at higher spreads and better market performance. TM’s leverage indicators continue to be on the lower side given no outstanding borrowings on the balance sheet. Liquidity profile is considered adequate. Going forward, focus of the management will be geared towards recovery against the litigated portfolio, which will provide impetus to the overall earning profile of the Modaraba. Maintaining asset quality metrics will remain important.

For further information on this ratings announcement, please contact at 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

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