Lahore: The Pakistan Credit Rating Agency (PACRA) has downgraded the long-term and short-term ratings of First Punjab Modaraba (FPM) at “BBB” (Triple B) [Previous: A-] and “A3” (A Three) [Previous: A2], respectively. These ratings denote low expectation of credit risk and an adequate capacity for timely payment of financial commitments.
The ratings reflect deterioration in the stand-alone risk profile of the Modaraba. The sponsoring institution – a medium sized bank, The Bank of Punjab – stands behind the Modaraba and is the main contributor towards FPM’s funding base.
Although the ratings draw significant comfort from this association, the support needs augmentation to mend the risk profile of FPM. Nevertheless, the Modaraba’s operations are still above the break-even sustenance level though the distance is fast reducing. The management is persisting in its efforts of business consolidation while curtailing further delinquencies and expediting the recovery procedure.
The outlook on the ratings is negative, given declining revenue base and profitability, and increasing provisioning requirement. The ratings are dependent on the management’s success to consolidate its operations, in-turn developing a profitable revenue stream. Meanwhile, any weakening in the perceived support from the sponsoring bank would carry negative implications for the ratings.
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