Press Release

VIS Reaffirms Entity Ratings of LSE Financial Services Limited

Karachi, December 21, 2021: 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 with adequate protection factors. Moreover, the risk factors may vary with possible changes in 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. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on December 17, 2020.
Reaffirmation of entity ratings incorporates low business risk on account of unique business model. The company initiated certain business plan revisions, under NBFC license obtained in 2016, entailing development of financing portfolio including term financing together with development of credit department and related credit and operational policies and procedures; the impact of which is yet to be seen. LSE plans to mitigate the credit risk emanating from loan portfolio through limiting exposures to Government backed entities and higher rated corporates.

Assessment of financial profile takes into account improvement in net profitability largely supported from share of profits from associates. Going forward, investment in associates will continue to support bottom line profitability, however, increase in core income emancipating from financing portfolio will be important. Ratings also derive comfort from conservative capital structure in absence of commercial borrowings and adequate liquidity. Achievement of projected growth in core income and maintenance of leverage indicators at current levels will be important for ratings, going forward.

For further information on this rating announcement, please contact the undersigned (Ext: 201) or Ms. Sara Ahmed (Ext: 207) at 021-35311861-70.


Javed Callea
Advisor

Applicable rating criterion: Non-Bank Financial Companies (Mar 2020)
https://www.vis.com.pk/kc-meth.aspx

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