Lahore, March 30, 2022 (PPI-OT):The ratings capture the aptness of the Bank as a growing institution in the microfinance sector. The Bank’s business model incorporates appropriate mitigant controls to keep its risk profile adequate. Reasoning with the market conditions, asset infection ratio stood at ~1% as at end-Dec’21. The net profitability of the bank has diluted in CY21 (CY21: PKR 27mln; CY20: PKR 53mln). The primary factor behind the dip is the shortfall in disbursements (over few months). Afterwards, rise in GLP was recorded (CY21: PKR 920mln; CY20: PKR 525mln), therefore it is expected that the Bank will be able to improve the similar growth trajectory in profitability.
The design of the lending portfolio represents concentration in the flagship product “Sujag Aurat” (Visionary Women), focused on women entrepreneurship and financial inclusion. The Bank’s funding needs are currently being fueled through a mixture of internal and external sources. A major share of the funding has been obtained from State Bank of Pakistan on a partially low cost. Whereas, deposit mobilization has also shown slight rise during CY21. The Bank has presence in Sindh with plans to go national.
As the equity of SMFB is expected to cross PKR 1bln this year and with that the Bank will be able to apply for a National Level License in CY23. A risk-averse approach towards expansion is the key essential, with funds being raised with a cautious approach. The ratings draw comfort from the Bank’s association with the Government of Sindh. The financial risk profile is reflected by sanguine liquidity, adequate profitability and low investment in non-earning assets. The ratings are dependent upon the bank’s ability to aptly combat the emerging risks under the current scenario in order to keep its business and financial risk profile intact.
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