Press Release

VIS Reaffirms Ratings of LSE Financial Services Limited

Karachi, December 17, 2020: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of LSE Financial Services Limited (LSEFSL) at ‘A/A-1’ (Single A/A-One). The medium to long-term rating of ‘A’ denotes good credit quality coupled with adequate protection factors. Moreover, risk factors may vary with possible changes in the economy. The short-term rating of ‘A-1’ denotes high certainty of timely payment coupled with excellent liquidity factors and supported by good fundamentals protection factors. The previous rating action was announced on November 5, 2019.

Ratings assigned to LSEFSL incorporate company’s low business risk appetite given its structured and unique business model. However, some revisions in business model has been made entailing introduction of MSME loans, development of credit department coupled with establishment of related operational policies and procedures. The risk associated with MSME loans is planned to be mitigated through liquid listed securities as collateral, with 35% to 50% margin. Core earnings of the company comprised revenue generation from various avenues while rental income, income from room maintenance and from financial assets constituting around two-third of recurring proportion of earnings, have remained largely stagnant. Around one-third of the asset base comprised investment in associates, income from the same has provided considerable support to the bottom line on a timeline basis. The ratings also derive comfort from conservative capital structure in absence of commercial borrowings and adequate liquidity. Meanwhile, the company would need to maintain its risk profile by establishment of robust credit approval system along with monitoring of asset quality of MSME loans before developing a loan portfolio. Moreover, the ratings depend on maintenance of leverage indicators around current levels, going forward.

For further information on this rating announcement, please contact Ms. Tayyaba Ijaz at 042-35723411-13 (Ext. 8004) and/or the undersigned at 021-35311861-66 (Ext. 306) or email at info@vis.com.pk



Faryal Ahmad Faheem
Deputy CEO


VIS Entity Rating Criteria: Non-Bank Financial Companies (Mar 2020)
https://www.vis.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 2020 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .