Press Release

VIS Reaffirms Ratings of First Paramount Modaraba at BBB/A-3

Karachi, December 30, 2020: VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings of First Paramount Modaraba (FPM) at ‘BBB/A-3’ (Triple B/A-Three).The long term rating of ‘BBB’ signifies 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-3’ depicts satisfactory liquidity and other protection factors which qualify entities / issues as investment grade. Risk factors are larger and subject to more variation. Nevertheless, timely payment is expected. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on December27, 2019.


The ratings assigned to FPM take into account its conservative business risk profile with primary focus on asset quality indicators, restricted lending to maintain asset quality and expected revenue diversification with the launch of online screening facility providing a cover against anti-money laundering/ combating of financing of terrorism (AML/CFT) risks. However, the impact of COVID-19 on the economy would make operating dynamics of the modarabas challenging going forward.

Regulatory relief measure granted by SECP to allow for delay of principal payment for one year to clients is expected to postpone the impact of potential prevailing infection cases on asset quality indicators. Leverage indicators continue to remain within manageable levels. Majority shareholding of the company is vested with general public. The concentration in the Certificate of Musharaka portfolio is notable, however, the modaraba has adequate liquidity and access to credit lines to fulfill any unexpected withdrawal requests. The ratings reflect weakening in operational and financial profile of the company including continuous attrition in financing portfolio and it’s earning potential post COVID-19. The profitability metrics exhibited slight deterioration owing to curtailed business operations and high finance cost; however, efficiency ratio has remained at manageable levels for the company over the years. The ratings will remain sensitive to sustainable growth in topline along with maintenance of asset quality and leverage indicators at current levels.

For further information on this rating announcement, please contact Ms. Maham Qasim (042-35723411-13, Ext. 8010) and/or the undersigned at 021-35311861-66 (Ext. 201) or email at info@vis.com.pk.



Faryal Ahmad Faheem
Deputy CEO

Applicable Rating Criteria: Non-Bank Financial Companies(March 2020)
http://www.vis.com.pk/kc-meth.aspx

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 2020 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .