Press Release

JCR-VIS Maintains Long Term Entity Rating of Tameer Microfinance Bank Limited at A- with a Negative Outlook

Karachi, April 30, 2008: JCR-VIS Credit Rating Company Limited has maintained the medium to long term entity rating of Tameer Microfinance Bank Limited (TMFB) at ‘A-’ (Single A Minus) with a ‘Negative’ Outlook. Short term rating has been revised from ‘A-2’ (A-Two) to ‘A-3’ (A-Three).

Spiraling inflation, particularly in food prices, has affected the repayment capacity of clients in the microfinance sector, predominantly those engaged in micro-enterprise activity. While the sector has seen considerable growth over the last year, profitability and self-sufficiency indicators are still considerably low across the sector as industry participants work towards achieving economies of scale by enhancing outreach requiring increased expenditure. Increasing level of delinquencies have also been faced in some geographic segments and certain products.

During the initial phase of operations, the portfolio of TMFB was heavily concentrated in Karachi, where economic and political turmoil led to significant delinquencies in some of the key branches. Over the out-going year, significant changes were made in key constituents of the business strategy including loan approval procedures (which have largely been centralized) as well as product and geographical diversification while deployment of multiple IT systems has also been achieved. While asset quality indicators have shown improvement, incremental infection on a monthly basis is still considered on the higher side and trends in this respect will be closely monitored.

During the last year, the bank accumulated considerable losses from operations and also on account of provisions/write-offs resulting in significant erosion of capital initially contributed by sponsors. Microfinance banks operating with a nation wide mandate are required to have paid-up capital (net of losses) of Rs. 500 million by the end of the current year. The bank has resolved to inject Rs. 60 million fresh equity while issuance of tier-2 capital is also on the anvil. Other options to meet the capital requirement are also under consideration. The Outlook on the assigned ratings continues to be ‘Negative’ on account of stress on long term rating, till such time the financial strength of the bank recuperates. JCR-VIS will re-visit ratings within the next few months.

The bank has resumed lending operations at an aggressive pace. A more comprehensive funding strategy has however yet to evolve to fuel future growth as developing a sizeable pool of low cost retail deposits may still require considerable time.

For further information on this rating announcement, please contact Ms. Sabeen Saleem (Ext: 608) or Ms. Sobia Maqbool (Ext: 506) at 5311861-70 or fax to 5311873.



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 2008 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .