JCR-VIS maintains entity ratings of NRSP Microfinance Bank Limited

Karachi, April 29, 2016 (PPI-OT):JCR-VIS Credit Rating Company Limited (JCR-VIS) has maintained the entity ratings of NRSP Microfinance Bank Limited (NRSPB) at ‘A-/A-2’ (Single A Minus/A-Two). Outlook on the assigned rating has been revised from ‘Stable’ to ‘Positive’. The previous rating action was announced on April 28, 2015.

The ratings assigned to NRSPB takes into account sound asset quality indicators, growing equity base on account of internal capital generation and increasing market share of the institution. Ratings also place reliance on the strength of the sponsors, their experience and commitment for financial support.

With loans for “Agri inputs” representing around 90% of gross microcredit portfolio, concentration in the lending portfolio continues to remain high. Dominance of bullet repayment structure poses challenges to portfolio risk profile. Comfort, however, can be drawn from the bank’s experience and satisfactory track record in agriculture financing. The bank plans to offer high ticket individual loan products to community organization members with good repayment history. This is expected to increase the average loan size while also rationalizing group vis-à-vis individual lending.

Deposit base witnessed sizeable growth which was more pronounced during the last quarter of FY15. With change in policy, deposits under mandatory savings have reduced on a timeline basis. Concentration in deposit base continues to remain high. Resource base of the bank was supplemented by a subordinated debt for a period of 8 years by KFW, a sponsor.

Markup income posted healthy growth during FY15 on account of volumetric growth in the microcredit portfolio. Meanwhile, lower cost of funding reflected positively on the spreads of the institution while overheads continue to remain lowest among peer microfinance banks.

For more information, contact:
Ms. Sobia Maqbool
CFA
JCR-VIS Credit Rating Company Limited
VIS House, 128/C,
25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: sobia@jcrvis.com.pk