VIS Maintains Strong Ratings for U Microfinance Bank Amid Economic Adjustments

Karachi, The VIS Credit Rating Company Limited (VIS) has reaffirmed its ratings for U Microfinance Bank Limited (UMBL), maintaining a stable outlook with an 'A+/A-1' for medium to long-term and short-term credit quality, respectively. This announcement reflects the bank’s consistent performance and robust financial health, despite economic fluctuations.

According to VIS Credit Rating Company Limited, UMBL’s ratings are buoyed by strong sponsorship from Pakistan Telecommunication Company Limited (PTCL) and sustained support from its key stakeholders, including the Government of Pakistan and Etisalat International Pakistan. The ratings also take into account significant equity injections aimed at bolstering the bank’s capital adequacy ratio (CAR), which has aligned with regulatory requirements after previously falling short. The ratings for UMBL’s debt instruments, TFC-I and TFC-II, were assigned 'A' and 'A-' respectively, indicating good credit quality with adequate protection factors.

UMBL, which transitioned from Rozgar Microfinance Bank following its acquisition by PTCL in 2012, has demonstrated notable growth in its Gross Loan Portfolio (GLP), particularly in the agriculture sector and gold-backed secured portfolios. The bank’s strategic shift towards secured lending and an emphasis on Equated Monthly Installment (EMI) loans over bullet loans reflects a broader adaptation to industry norms and risk management enhancements. These measures are expected to contribute to a projected turnaround in the bank’s operating results and pre-tax earnings for the current year.