Lahore, December 21, 2021 (PPI-OT):The rating of the TFC reflects the coverage of the instrument through the security structure – 50% of the Issue Amount will be secured against pari passu charge on the Issuer’s Book Debts, Advances and Receivables with 25% margin. Whereas, 50% of the Issue amount is secured against lien on government securities of a similar tenor. In case the Issuer fails to make the Profit/Principal payment on the relevant due date, the Security Agent reserves the right to realize the cash from the government securities placed under lien with the security agent and make payment including principal and interest as falling due to the relevant investor within 05 days of the relevant due date without invoking Event of Default.
U Microfinance Bank Limited (UMBL) is a fast-growing player in the Microfinance Sector (End-Jun’21: 9.8%, End-Dec’20: 9.3% market share in total Gross Loan Portfolio). The Bank’s ambitious growth strategy encompasses multi-faceted targets focused towards achieving growth in the retail banking segment, developing digital banking platform and building a wholesome treasury book. The Bank’s funding needs are primarily fostered through a growing deposit base, coupled with sizable borrowings. Sponsor support is reflected by way of conversion of a part of the subordinated debt into Tier-I capital in the form of preference shares of PKR 1bln in Dec-20. Almost half of the Bank’s portfolio is gold backed which provides a strong mitigant against potential credit risk.
COVID-19 is an ongoing challenge. While it has taken a toll on many businesses, its ramifications are still unfolding. The proactive measures taken by the regulators and other concerning bodies have mitigated the potential damages much anticipated from this pandemic. Vigilance is required as the loan repayment cycle remains amid re-emerging variants of COVID-19. Average loan size of the Bank is on the higher side in relation to its peers on account of gold backed lending. The rating is dependent upon the Bank’s compliance with the agreed terms.
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