PACRA Holds SAFCO Microfinance Company Ratings Steady Amidst Operational Growth

Karachi, The Pakistan Credit Rating Agency Limited (PACRA) has maintained the entity ratings of SAFCO Microfinance Company Private Limited (SMCPL) at ‘BBB’ for long-term and ‘A3’ for short-term, reflecting a stable outlook and consistent performance amidst economic challenges.

According to The Pakistan Credit Rating Agency Limited, SMCPL, transforming from a non-profit to a for-profit entity under SAFCO Support Foundation (SSF), continues its mission to provide financial services to low-income entrepreneurs across Sindh. With a substantial portion of its beneficiaries being women and smallholder farmers, the company operates through 58 branches, facilitating over 700,000 clients. Despite economic fluctuations and an increase in policy rates affecting the microfinance sector, SMCPL has shown resilience with its loan portfolio management and financial strategies.

Financially, SMCPL has reported a significant increase in markup income by 58% during the first half of the fiscal year 2024, a rebound from a loss in the previous year. The company’s Gross Loan Portfolio (GLP) was documented at around PKR 3.7 billion as of the first half of FY24, showing effective recovery and profitability improvements. The management’s strategic direction and corporate governance practices have been crucial in navigating these financial waters, alongside maintaining a stable and experienced senior management team.

However, challenges remain with the company’s low market share and limited geographical spread, necessitating sustained performance improvement to secure future growth and stability. PACRA’s future ratings will focus on SMCPL’s expansion, technological advancements, and their effects on operational and risk management efficiency.

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