Tag Archives: PACRA

Pakistan Credit Rating Agency Limited assigns Asset Manager Rating to Pak Oman Asset Management Company Limited

Lahore, November 17, 2016 (PPI-OT):The rating reflects the company’s affiliation with a development finance institution – Pak Oman Investment Company Limited (POICL). Lately, POICL made equity injection beefing up equity holding. The company’s strategy plan envisages elevating AUM base through targeting institutional and retail investors while marketing its current fund slate in medium term; a couple of new funds would be launched simultaneously. With the growth in AUMs, the company plans to beef up its human resource base to strengthen its organisational structure and decision making process.

However, high investor concentration and low contribution from the retail segment remains an impediment. Furthermore, timely success of the strategy plan coupled with good management’s performance remains to be seen. The rating is dependent upon the company’s ability to effectively execute its business strategy while leveraging its association with POICL. At the same time, ability of the POAMCL’s management’s performance to beef up its AUM base would be crucial. In addition, superior fund performance coupled with diversity in the fund slate and investor base through new funds and SMAs would be important.

For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com

Pakistan Credit Rating Agency Limited Maintains IFS Rating of Shaheen Insurance Company Limited

Lahore, November 17, 2016 (PPI-OT):The rating reflects SIC’s strong parentage – Shaheen Foundation – ensuring financial soundness of the company while augmenting it’s business operations and control environment through active vigilance. Shaheen Insurance has sustained market share keeping pace with the industry’s growth. Dominating portfolio – motor – is depicting good underwriting results, enabling the company to nourish other segments. Accumulated losses have reduced significantly, strengthening equity base. The company envisages continuing expanding in motor segment, while exploring opportunities in the energy sector. Major focus is being directed towards tapping potential of captive business – PAF and related.

The liquidity profile needs to be strengthened at a higher rate alongside quality business expansion. This provides comfort against the outstanding liabilities net of reinsurance. The bottom-line support from investment income needs to improve gradually. Nevertheless, the company is carrying a sizeable quantum of illiquid non-earning assets, though efforts are being made to minimize the ensuing impact. The rating is dependent upon sustained improvement in business profile of the company with enduring emphasis on profitability. Uptick in the liquidity position would be essential.

For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com

Pakistan Credit Rating Agency Limited assigns preliminary rating to Proposed privately placed TFC of JS Bank Limited

Lahore, November 17, 2016 (PPI-OT):The rating of unsecured, subordinated, and privately placed TFC is primarily based on long-term rating of JS Bank – the issuer. The rating of JSBL reflects its strengthened position in the country’s competitive banking landscape. This emanates from enhanced system share (approaching 2% of deposits at end-Sep16). The benefit has trickled down whereby concentration – both in deposits and advances – is approaching adequate levels. Expanded branch network is supporting deposit growth. Meanwhile, JS Bank is carefully building its loan book; although asset quality is good.

The strategy is to i) foster penetration of existing branches while expanding the network beyond 300 branches over the near-term; ii) spread advances book through different products over multiple sectors; iii) build non-fund based income; and iv) hold strength in treasury operations. JS Bank has adequate capital level (CAR at end-Sep16: ~12% primarily tier I). However, for credit expansion, the bank is in process of issuing this tier II TFC. Rating is dependent on JS Bank’s ability to maintain its growth trajectory to establish itself in the medium-sized banking space of Pakistan. Meanwhile, upholding asset quality, adding diversity to income streams, and strong governance framework are critical.

For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com

Pakistan Credit Rating Agency Limited upgrades entity ratings of East West Insurance Company Limited

Lahore, November 14, 2016 (PPI-OT):The ratings take into account overall improvement in the risk profile of the company. Persistent growth enabled sizeable rise in market share in recent years (9M16: ~3%, CY12: 1.8%). Prudent underwriting practices along with a focus on diversified products and customers helped the company to demonstrate continued healthy underwriting performance. Revamped investment management framework has been beneficial, thereby adding a sizeable cushion to the bottom-line. Rolling out the advanced IT infrastructure and real time insurance solution, expected to complete by end-Dec16, would augment the control environment.

The company envisages strengthening its footprints, while pitching medium and small sized risks, with enduring focus on the crop and livestock insurance. The financial risk profile benefits from the company’s strong liquidity position; cash generation efficiency of the company is higher. The longevity of the company is supported by a consensus document among the sponsoring family members regarding the succession of key roles, though material implementation progress is yet to be achieved.

The rating is dependent on company’s ability to improve its market position with sustained profitability. The liquidity position and, hence, financial risk profile should remain afloat along with growth. Timely implementation of upgraded IT infrastructure and MIS is critical for the rating.

For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com

Pakistan Credit Rating Agency Limited downgrades entity ratings of Escorts Investment Bank Limited

Lahore, November 14, 2016 (PPI-OT):EIBL is experiencing deterioration in its business and financial profile. This has severely diminished its risk absorption capacity- also the bank has not been able to meet minimum equity requirement of PKR 750mln. The management has not been able to arrest declining trend in performance. The quantum of loss has gone up significantly in recent periods eroding the bank’s equity. The bank’s woes primarily arise from squeezing size of earning assets, whereas non-earning assets now dominate its asset base. Given reduced equity base, the assets are mainly funded through deposits. Consequently the bank has increased liquidity gap. It would be challenging to meet sizeable deposit withdrawal call.

The management is putting in multiple efforts to cure the situation. The focus is on arranging fresh equity through a new partner. Herein, timeliness is critical. Any significant delay would magnify the bank’s challenges and may put pressure on ratings. Continuous erosion in equity, in turn risk absorption capacity, is highlighting urgency of break-even on a sustainable basis. In this regard, curtailing unfavourable gap of earning assets vis-a-vis interest bearing liabilities remains important.

For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com

Pakistan Credit Rating Agency Limited assigns entity ratings to Reliance Weaving Mills

Lahore, November 11, 2016 (PPI-OT):The ratings reflect RWML’s adequate business profile. Volumetric growth in local sales, on the back of recent capacity expansion, has provided support to revenues despite lower product prices. Overall gross margins further squeezed mainly due to spinning segment – a phenomenon largely observed industry wide. However, the management expects gradual improvement in margins in future given, (i) better cotton crop expectation for FY17 and rebound in international prices, and (ii) continuous energy supply at cheaper rates. The ratings are constrained by stretched financial profile. This is reflected in mismatch in short-term debt vis-à-vis self-liquidating current assets.

Limited cash-flows – a factor of lower profitability – constrained the coverages. Cognizant of these issues, the management is in process of re-profiling its balance sheet – converting short-term debt into long-term at lower rates. Decline in finance cost, while supporting debt service coverages, has provided respite to financial risk profile lately. RWML’s association with Fatima Group, a growing conglomerate, is a key rating factor.

The ratings are dependent on the management’s ability to prudently mange the liquidity and debt profile of the company, particularly working capital, while sustaining business margins. Significant deterioration in coverages will have negative implication for the ratings. Meanwhile, strengthening of governance framework for better oversight of strategic affairs is considered essential

For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com