Press Release

JCR-VIS Upgrades Entity Ratings of FINCA Microfinance Bank Limited

Karachi, January 09, 2017: JCR-VIS Credit Rating Company Limited (JCR-VIS) has upgraded the entity ratings of FINCA Microfinance Bank Limited (FINCA MFB) from ‘A-/A-2’ (Single A Minus/A-Two) to ‘A/A-1’ (Single A /A-One). Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on April 26, 2016.

The ratings assigned to FINCA MFB take into account improvement in core areas of the bank including its market share, asset quality, deposit concentration and overheads. Ratings continue to draw comfort from FINCA MFB’s association with FINCA International, a global microfinance organization operating in 23 countries including Pakistan. Sponsor support has been demonstrated in the past with equity injection to support bank’s growing operations while the bank also enjoys technical support from its sponsor emanating from FINCA’s global experience in microfinance.

Notable improvement in core earnings of the bank on the back of growth in lending operations and declining overheads and cost of fund strengthened positive momentum in internal capital generation. Asset quality indicators after witnessing temporary deterioration have also stabilized. Efficiency levels are expected to further improve under bank’s initiatives to automate core processes while branchless banking activities will support diversification of revenue stream.

As a result of a well-conceived strategy of targeting low ticket deposits, granularity in deposit base has depicted improvement. Leverage ratio of the bank remains strong among peer microfinance banks underpinned by adequate capitalization levels vis-à-vis risk on the balance sheet. Liquidity levels, however, have room for further improvement.

For further information on this rating announcement, please contact the undersigned at 021-35311861-70 (Ext: 234) or Mr. Waqas Munir, FRM at 042-35723411-13 (Ext: 8010).


Javed Callea
Advisor

Applicable Rating Criteria: Micro Finance Banks (May 2016)
http://jcrvis.com.pk/kc-meth.aspx

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