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PACRA maintains the rating of Kashf Foundation | PPTFC

Lahore, September 25, 2023 (PPI-OT): The rating emanates from the prominent profile of the Kashf Foundation (herein referred to as “The Foundation” or “the MFI”) in the Microfinance sector of Pakistan (herein referred to as"MFIs"). SECP is the Regulatory body for MFIs and they are governed through NBFC Rules, 2003 and NBFC Notified Entities Regulations, 2008. Kashf Foundation is a not-for-profit organization. The PAR (Portfolio at risk) of the MFI stood at 0.5% and has augmented the credit risk profile of the MFI.

The rating takes comfort from a consistent upward-sloping growth trajectory in the GLP during a time span of three years. The Kashf Karobar Karza is their foremost product and predominately contributed to the markup earned and net profitability of the MFI. The MFI primary source of funding is borrowing with an optimal mix of local and foreign financing which also includes the issuance of PKR 2.5bln PPTFC bond to further augment their Gross Loan Portfolio (GLP) growth. The MFI has executed CCS (Cross-Currency Swaps) and FRAs (Forward Rate Agreements) to mitigate the foreign exchange risk in foreign borrowings.

The optimization of operational costs with respect to their total disbursement of the portfolio has strengthened the profitability matrix coupled with spiral markup and non-markup income. The consistent appreciable growth in the net profitability of the Company during the time span of two years which ultimately beefed up the net equity levels provides comfort to the ratings of the Foundation. Despite the hyper inflationary environment and other microeconomic challenges specifically the consistent surge in KIBOR which ultimately elevated the cost of funds for MFIs, the portfolio at risk (PAR) 30 days of MFIs has shown an improvement and reduced to 3.0% (4QCY22: 4.2%) mainly on the back of the recoveries in the flood-impacted portfolios. The industry's loan portfolio requires prudent management mainly on the back of the consistent surge in the policy rate. However, going forward the impact of gross lending rate on the financial risk profile specifically on NPLs (Non-performing Loans) is being evaluated in due course of time.

The ratings depend on the foundation’s ability to sustain positive asset health indicators and also monitor the impact of technological advancement on the operational as well as risk efficacy of the Foundation. The due date for the payment of final principal installment is 30th Sep'23. The instrument would be redeemed thereafter and accordingly would be withdrawn.

For more information, contact:

Analyst,

The Pakistan Credit Rating Agency Limited (PACRA)

Awami Complex, FB1, Usman Block New Garden Town,

Lahore, Pakistan

Tel: +92-42-5869504-6

Fax: +92-42-5830425

Email: hammad.rashid@pacra.com

Website: www.pacra.com

The post PACRA maintains the rating of Kashf Foundation | PPTFC appeared first on Pakistan Business News.

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