Press Release

JCR-VIS reaffirms the Entity Ratings of The First MicroFinanceBank Limited at A+/A-1

Karachi, April 29, 2010: JCR-VIS Credit Rating Company Limited has reaffirmed the entity rating of The First MicroFinanceBank Limited (FMFB) at ‘A+/A-1’ (Single A Plus/A-One) with a ‘Stable’ Outlook.

FMFB is a major player in the microfinance banking sector having nearly one third share of advances and three fourths share of total deposits of the sector. The ratings also derive support from strong group synergies and backing of the main sponsors, Aga Khan Development Network and its associated entities. With control over the largest private sector commercial bank and two of the largest companies in the general and life insurance sectors the sponsor group is one of the strongest groups operating in the country.

FMFB has been able to control infection, despite the current turbulent economic scenario. The bank has also posted a significant turnaround by achieving operational self-sufficiency and registering a net of profit of Rs. 27.2m after two years of consecutive losses. Increased focus on rural lending, where delinquency levels are lower; significant geographical and product-wise diversification and active monitoring of portfolio trends have allowed the bank to control infection. Although lower than budgeted targets, growth in advances portfolio was still notable and was fueled by significant deposit growth. Major proportion of deposit growth stemmed from growth in fixed term deposits leading to increase in cost of funding; however, increase in yield on the lending portfolio has allowed the bank to keep spreads from falling significantly.

Despite significant concentration in deposit base, which remained around prior year level, liquidity risk has been mitigated to a considerable extent by placement of excess cash in liquid avenues including government securities. In view of the profile of the deposit base and ongoing growth in core operations, liquidity management strategy would continue to play an important role in the bank’s overall risk profile. Furthermore, while the level of capitalization is adequate for current year growth targets, it may need to be enhanced for future growth.

For further information on this rating announcement, please contact the Ms. Sabeen Saleem (Ext: 501) or Mr. Zia Usmani (Ext: 507) at 35311861-72 or fax to 35311873.


Faheem Ahmad
President & CEO

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 2010 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .