Karachi, August 16, 2018 (PPI-OT): JCR-VIS Credit Rating Company Limited has reaffirmed entity ratings of ASA Pakistan Limited (ASA Pakistan) at ‘BBB+/A-3’ (Triple B Plus /A-Three). Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on June 23, 2017.
Incorporated in 2008, ASA Pakistan operates as a microfinance company and is a wholly owned subsidiary of ASA International Holding (ASAI). The assigned ratings incorporate the sound sponsor support received by ASA Pakistan in the form of both technical and financial assistance. ASA Pakistan has implemented the core lending methodology deployed at various institutions of the group. Ratings incorporate continued technical and financial support from the sponsors.
The company has applied for a Microfinance Bank (MFB) license; approval of the same is awaited from the regulator. As per management, the company has complied with all the requirements specified by the regulator in this regard. At present, overall governance infrastructure is considered adequate with the presence of seasoned professionals on board and experienced senior management team. We understand the sponsors are committed to provide support in the form of equity injection to meet the regulatory and the projected capital requirement.
Assigned ratings also incorporate the improvement witnessed in capitalization, liquidity and profitability indicators. Gross advances portfolio depicted sizeable growth during the outgoing year. With increase in portfolio size, asset quality indicators of the company slightly weakened; however, the same remain favourable in comparison to peers. Growth in the profitability continued with increase in the quantum of advances portfolio. The same trend in earnings profile is expected to persist in future provided that asset quality indicators are maintained and administrative expenses are kept under control.
Capitalization indicators remain sound and may witness further improvement given planned equity injection in view of the ongoing conversion to a MFB. Increasing trend has been witnessed in liquidity indicators; however, the same have remained historically low. Going forward, ratings of the company would remain dependent on successful transformation into a MFB, maintaining asset quality indicators, development and implementation of strong credit risk assessment and internal control systems.
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