Press Release

JCR-VIS Reaffirms Ratings of FINCA Microfinance Bank Limited

Karachi, April 27, 2017: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of FINCA Microfinance Bank Limited (FINCA MFB) at ‘A/A-1’ (Single A /A-One). Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on January 09, 2017.

The ratings assigned to FINCA MFB take into account its association with FINCA International, a global microfinance organization operating in 21 countries including Pakistan. FINCA MFB continues to receive support from its parent through transfer of technical expertise emanating from FINCA’s global experience. The ratings also take into account continuing improvement in the operating performance of FINCA MFB as reflected by growing market share, sustained asset quality and improved profitability providing impetus to the internal capital generation of the bank.

Micro credit lending entailing higher ticket size continues to be the forte of the bank. Microcredit portfolio reflects an adequate diversification of agricultural, livestock and enterprise loans and among Equal Monthly Installment (EMI) and Bullet repayment structures. Going forward, advances portfolio are projected to grow at a healthy pace underpinned by expanding branch network and higher average loan sizes.

Declining cost of fund positively reflected on the spreads while overheads have also trended downwards. Concentration in deposit base continues to remain high. Efforts are underway to build a broad base deposit mix by focusing on small ticket deposits; however till the time such granularity is achieved, the bank may need to maintain a larger liquidity cushion on the balance sheet.

As per the Digital Finance Services (DFS) strategy, the bank aims to digitalize its existing branch banking services as well as offering customers digital mobile wallets. DFS is expected to improve customer experience while also offering process efficiencies to the bank.

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://www.jcrvis.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 2017 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .