JCR-VIS Credit Rating Company Limited revises medium to long-term entity rating of First National Bank Modaraba

Karachi, January 02, 2014 (PPI-OT): JCR-VIS Credit Rating Company Limited (JCR-VIS) has revised the medium to long-term entity rating of First National Bank Modaraba (FNBM) from ‘A+’ (Single A Plus) to ‘A’ (Single A) while maintaining the short-term rating at A-1 (A-One). Outlook on the medium to long term rating has been changed from ‘Negative’ to ‘Stable’.

The ratings draw strength from the implicit support of National Bank of Pakistan (NBP) which owns National Bank Modaraba Management Company Limited, the management company of FNBM. In addition to name sharing, credit lines have also been made available from NBP.

Historically, lending portfolio of FNBM had featured manageable level of infection. In FY12 and FY13, the modaraba experienced a rise in infection, particularly in its murabaha portfolio.

Provisioning requirements against non-performing exposures resulted in a loss in FY13. In order to maintain the risk profile of the institution, external equity injection may be required. Fresh equity injection may also be required to pursue growth in future as leverage indicators have trended upwards.

Liquidity profile of the modaraba was adversely affected by the increase in non-performing assets. The availability of un-utilized credit lines provides some comfort to the liquidity assessment. At end FY13, a larger proportion of funding comprised Certificates of Musharakah, which the company has been able to raise at lower cost vis-à-vis bank credit lines.

For more information, contact:
Ms. Sobia Maqbool
CFA
JCR-VIS Credit Rating Company Limited
Tel: at 021-35311861-70
Fax: +9221 35311872-3