Lahore, April 07, 2015 (PPI-OT): The Pakistan Credit Rating Agency Limited (PACRA) has upgraded the long term entity rating of Apna Microfinance Bank Limited [Apna Bank] to ‘BBB+’ (Triple B Plus) [previous: BBB]. The short term rating is maintained at ‘A3′ (A Three). These ratings denote a low expectation of credit risk emanating from adequate capacity for timely payment of financial commitments.
Apna Bank’s ratings reflect the sponsors’ demonstrated commitment in providing requisite support to expand its operations. A right issue (PKR 550mln) is in the process. This, while supporting risk absorption capacity, would enable Apna to operate at National level. The management is eyeing expansion in Punjab – the core geography of the sponsors – mainly to tap potential agricultural borrowers. Successful materialization of this strategy should lead to improving bottom-line.
Apna has extended its outreach beyond Karachi to interior Sindh in CY14; bringing significant growth to the bank’s lending portfolio. However, achieving good asset quality – portfolio at risk higher than sector norm – is the key challenge. This continues to restrain profitability. With targeted growth in risk assets, strengthening of related systems and controls is important. Besides, high turnover in management team needs attention.
The bank’s ratings are dependent on (i) sustainable profitability to avert pressure on risk absorption (ii) building of cohesive management team to achieve desired performance output, (iii) bringing down infection at par with industry, and (iv) improvement in technological infrastructure to bring operational efficiency. At the same time, regulatory compliance for better governance is important.
For more information, contact:
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Category: General Business News