Lahore, May 06, 2022 (PPI-OT):NRSP Bank reflects good presence across the country with about 150 branches in and around 10 regions. The geographical spread provides strength to the bank. NRSP MFB has been serving increasing number of customers and has cemented its position in the industry amongst the top players of the microfinance sector with ~6.9% share in total gross loan portfolio. Overall performance indicators reflected deteriorated outlook in CY21. Consequently, the Bank’s GLP witnessed a slight decline. Asset quality impaired significantly, as deferred book to total GLP was sizeable.
Further challenges in recovery and markup suspension led to decreased markup earned. Bottom line of the Bank decreased manifold, depicting a loss of PKR 1,231mln (Profit in CY20: PKR 793mln). Management’s commitment to recoup the asset health and consolidate the Bank’s position within the stipulated time is an acute necessity. Moreover, since the projected outlook of the Bank indicates absorbing significant cash losses, timely yet matching sponsor support through Equity injections is essential.
The sponsors have extended support, both in technical and financial forms, to the Bank historically with expression of explicit intention from NRSP to provide financial support in form of capital injection, as and when required. Further injection of funds is expected in coming years. Though SBP’s Relief Packages have come handy to the sector in protecting the credit quality of the players during the previous waves, the out-turn of the situation, and its relative impact on the risk profiles of industry players, including NRSP Microfinance Bank, is yet to unfold in the days to come.
The ratings are dependent upon the out-turn of management’s plans to steer the risk profile of the Bank towards improved trajectory. Timely Sponsor Support is imperative. The assigned outlook is reflective of the short-term challenges that the Bank’s business and financial risk profile are facing, particularly reflecting in high infection ratio, constrained profitability and erosion in CAR. “Watch” reflects the need to oversee the risk profile of the Bank against unavoidable challenges, going forward.
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