JCR-VIS Maintains Entity Ratings of Trust Modaraba

Karachi, January 26, 2018 (PPI-OT):JCR-VIS Credit Rating Company Limited (JCR-VIS) has maintained entity ratings of ‘BBB-/A-3’ (Triple B Minus/A-Three) assigned to Trust Modaraba (TM). Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on December 6, 2016.

Ratings assigned take into consideration the limited scale of operations of TM. In 2009, management control of the modaraba was transferred to Al-Zamin Modaraba Management (Private) Limited (AZMM) on account of TM’s deteriorating financial and operating performance in previous years.

Current ratings of TM take into account adequate liquidity and capitalization indicators of the modaraba. Nevertheless, it is constrained by weak asset quality indicators, though slightly improved in the outgoing year, and limited asset base. Financing portfolio of the company comprises various modes of financing including Ijarah, Murabahah, Musharakah, diversification projects and equity market operations.

Financing base of the Modaraba declined in FY17 given that growth in the portfolio remained contingent on funding. The Modaraba plans to mobilize borrowings in order to grow its portfolio; developments in this regard are yet to materialize. Despite inherited infection in the financing portfolio, a single exposure does not exceed more than 10% of its equity base. Nonetheless, quality of the financing portfolio must be maintained in order to ensure sustainability and growth in earnings.

Infection levels of the Modaraba continue to remain on the higher side. Subsequent to management takeover, consistent efforts were made towards recovery of its infected portfolio. However, actual recoveries have remained lower than the projected levels on account of delay in legal proceedings. Recovery of projected NPLs and availability of fresh funding will remain key rating drivers.

For more information, contact:
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

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