Press Release

JCR-VIS Reaffirms Entity Ratings of ASA Pakistan Limited

Karachi, August 16, 2018: JCR-VIS Credit Rating Company Limited has reaffirmed entity ratings of ASA Pakistan Limited (ASA Pakistan) at ‘BBB+/A-3’ (Triple B Plus /A-Three). Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on June 23, 2017.

Incorporated in 2008, ASA Pakistan operates as a microfinance company and is a wholly owned subsidiary of ASA International Holding (ASAI). The assigned ratings incorporate the sound sponsor support received by ASA Pakistan in the form of both technical and financial assistance. ASA Pakistan has implemented the core lending methodology deployed at various institutions of the group. Ratings incorporate continued technical and financial support from the sponsors.

The company has applied for a Microfinance Bank (MFB) license; approval of the same is awaited from the regulator. As per management, the company has complied with all the requirements specified by the regulator in this regard. At present, overall governance infrastructure is considered adequate with the presence of seasoned professionals on board and experienced senior management team. We understand the sponsors are committed to provide support in the form of equity injection to meet the regulatory and the projected capital requirement.

Assigned ratings also incorporate the improvement witnessed in capitalization, liquidity and profitability indicators. Gross advances portfolio depicted sizeable growth during the outgoing year. With increase in portfolio size, asset quality indicators of the company slightly weakened; however, the same remain favorable in comparison to peers. Growth in the profitability continued with increase in the quantum of advances portfolio. The same trend in earnings profile is expected to persist in future provided that asset quality indicators are maintained and administrative expenses are kept under control. Capitalization indicators remain sound and may witness further improvement given planned equity injection in view of the ongoing conversion to a MFB. Increasing trend has been witnessed in liquidity indicators; however, the same have remained historically low. Going forward, ratings of the company would remain dependent on successful transformation into a MFB, maintaining asset quality indicators, development and implementation of strong credit risk assessment and internal control systems.

For further information on this rating announcement, please contact the undersigned (Ext: 201) at 35311861-70 or fax to 35311872-3.



Javed Callea
Advisor

Applicable Rating Criteria: Microfinance Banks (June 2016)
http://www.jcrvis.com.pk/docs/Meth-MFBs201606.pdf

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 2018 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .