Press Release

VIS Reaffirms Entity Ratings of Pakistan Mortgage Refinance Company Limited (PMRC)

Karachi, April 12, 2022: VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings of Pakistan Mortgage Refinance Company Limited (PMRC) at ‘AAA/A-1+’ (Triple A/A-One Plus). Outlook on the assigned ratings is ‘Stable’. The long-term rating of ‘AAA’ indicates highest credit quality; the risk factors are negligible, being only slightly more than for risk-free Government of Pakistan’s (GoP) debt. The short-term rating of ‘A-1+’ signifies highest certainty of timely payment; Short-term liquidity, including internal operating factors and /or access to alternative sources of funds, is outstanding and safety is just below risk free GoP’s short term obligations. Previous rating action was announced on April 05, 2021.

The assigned ratings continue to remain underpinned by PMRC’s shareholding structure (public sector holding of 43.45%) and strong Government and Regulatory support. The ratings also take into account low exposure to credit & market risk, sound capitalization indicators, satisfactory policy framework, seasoned management team and strong risk management controls. Maintaining aggregate risk profile of advances and investments at levels commensurate with the assigned ratings will remain an important factor.

The demand for housing finance is expected to remain sound given the housing deficit in the country. Initiatives, such as Naya Pakistan Housing Scheme and Mera Pakistan Mera Ghar are providing impetus to growth in mortgage financing. During 2021, total advances portfolio of PMRC grew by 58% to Rs. 23.7b (47% of asset base) as at Dec’21. Maintaining sound portfolio quality indicators through continued effective implementation of credit risk management strategy is considered a key rating driver. Exposure to market risk is on the lower side with sovereign debt securities comprising 97% of the total investments.

Net markup income was 20% lower YoY, which was mainly a result of contraction in spread. Profitability is expected to improve driven by forecasted volumetric growth in advances & investments and increase in interest rates. Accordingly, efficiency ratio (cost to income) is expected to remain strong. Capital Adequacy Ratio (CAR) is expected to remain comfortably above statutory requirement over the rating horizon. Liquidity profile remains strong in view of sizeable liquid assets in relation to total borrowings. Funding profile draws support from availability of long-term funding from World Bank (WB) and close matching of the duration and maturity of assets and liabilities.

For further information on this rating announcement, please contact Mr. Arsal Ayub, CFA (Ext: 215) or the undersigned (Ext. 207) at 021-35311861-70 or email at info@vis.com.pk .




Sara Ahmed
Director

Applicable Rating Criteria: Government Supported Entities - July 2020
https://docs.vis.com.pk/docs/Meth-GSEs202007.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 2022 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .