Press Release

JCR-VIS Maintain Entity Ratings of First Credit and Investment Bank Limited

Karachi, December 24, 2014: JCR-VIS Credit Rating Company Limited (JCR-VIS) has maintained the entity ratings of First Credit and Investment Bank Limited (FCIBL) at ‘A-/A-2’ (Single A Minus/A-Two). Outlook on the assigned rating has been revised from ‘Negative’ to ‘Stable’. The previous rating action was announced on December 31, 2013.

The rating action has been taken on the back of reduced exposure to credit risk on a timeline basis and improved profitability. The management is projecting recoveries in the on-going year in addition to which other certain one-time gains are likely to enhance profits. Realization of the same is considered essential, as earnings have otherwise limited room to absorb the impact of currently un-provided non-performing assets. Reduction in non-earning assets is also likely to contribute to improvement in earnings over the long term.

Operating activities of the bank remained limited; in recent years, FCIBL has continued to deleverage. Assets having sound marketability are significantly higher than outstanding obligations, in view of which FCIBL is likely to be able to meet its obligations in a comfortable manner. Core focus of the senior management is on recoveries. FCIBL has also applied to the Securities and Exchange Commission of Pakistan (SECP) to lift the ban on accepting deposits. Once permission is received, money market activities will be increased in addition to which the management also plans to build secured financing portfolio, including car financing. Quality of fresh exposures assumed by the institution will be monitored for impact on the risk profile.

The assigned ratings take into account the shareholding structure of the institution, with National Bank of Pakistan (NBP) and Water and Power Development Authority, each having a stake of 30.8% in the institution. As is the case with other Non-Banking Finance Companies (NBFCs), FCIBL’s equity at end June 2014 was short of the minimum capital requirement; the shortfall was reported at Rs. 350.6m. JCR-VIS will track regulatory developments in this regard. Moreover, approval of certain directors as per the Fit & Proper criteria of the SECP is also awaited. A well functioning Board, with professionals having relevant experience, is considered a key component of the overall governance framework of any institution.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 604) at 35311861-35311870 or fax to 35311873.

Jamal Abbas Zaidi
Deputy CEO

Applicable Rating Criteria: Non-Bank Financial Companies (March 2005)

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 2014 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .