JCR-VIS assigns positive outlook to Khushhali Bank Limited

Karachi, April 23, 2014 (PPI-OT): JCR-VIS Credit Rating Company Limited (JCR-VIS) has maintained the medium to long term entity rating of Khushhali Bank Limited (KBL) at ‘A’ (Single A) and short term rating at ‘A-1’ (A-One). Outlook on the assigned ratings has been revised from ‘Stable’ to ‘Positive’.

The ratings incorporate the profile of sponsors, with shareholding largely vested with a UBL (United Bank Limited) led consortium of reputable international funds. The bank has a strong governance infrastructure and benefits from the diversity of experience of its Board members.

KBL has the largest market presence amongst other banks in the microfinance sector with a branch network spread across all provinces of the country. Since acquisition by current sponsors, KBL has embarked upon an aggressive growth driven strategy which entails product mix diversification.

While KBL continued to cater to rural and urban markets through its core group lending product, the bank also scaled up its secured portfolio to diversify its loan book; secured loans represented one-fourth of the total portfolio at end-FY13. Portfolio quality indicators have remained intact and rate of incremental infection has also tapered off in 2013.

Over the long term, the bank plans to establish its presence in the Micro, Small and Medium Enterprise (MSME) segment, which is largely untapped. The resilience of internal control systems will be tested further as the bank forges ahead with its growth plans in new markets and products.

The bank also posted growth in deposits in the out-going year though deposit mix witnessed less than desired changes in terms of concentration levels and cost. During the on-going year, the management’s focus will remain on improving deposit mix. A diversified deposit mix may be a more sustainable source of funding over the long term.

Core earnings of the bank have depicted notable improvement in the out-going year on the back of growth in lending operations. Optimizing the cost infrastructure, both in terms of funding and human resources will be important in achieving sustained improvement in profitability. Meanwhile, maintaining portfolio quality indicators is considered essential.

For more information, contact:
Ms. Sobia Maqbool
CFA
JCR-VIS Credit Rating Company Limited
Tel: at 021-35311861-70
Fax: +9221 35311872-3

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