Karachi, April 12, 2022 (PPI-OT):VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings of Pakistan Mortgage Refinance Company Limited (PMRC) at ‘AAA/A-1+’ (Triple A/A-One Plus). Outlook on the assigned ratings is ‘Stable’. The long-term rating of ‘AAA’ indicates highest credit quality; the risk factors are negligible, being only slightly more than for risk-free Government of Pakistan’s (GoP) debt. The short-term rating of ‘A-1+’ signifies highest certainty of timely payment; Short-term liquidity, including internal operating factors and /or access to alternative sources of funds, is outstanding and safety is just below risk free GoP’s short term obligations. Previous rating action was announced on April 05, 2021.
The assigned ratings continue to remain underpinned by PMRC’s shareholding structure (public sector holding of 43.45%) and strong Government and Regulatory support. The ratings also take into account low exposure to credit and market risk, sound capitalization indicators, satisfactory policy framework, seasoned management team and strong risk management controls. Maintaining aggregate risk profile of advances and investments at levels commensurate with the assigned ratings will remain an important factor.
The demand for housing finance is expected to remain sound given the housing deficit in the country. Initiatives, such as Naya Pakistan Housing Scheme and Mera Pakistan Mera Ghar are providing impetus to growth in mortgage financing. During 2021, total advances portfolio of PMRC grew by 58% to Rs. 23.7b (47% of asset base) as at Dec’21. Maintaining sound portfolio quality indicators through continued effective implementation of credit risk management strategy is considered a key rating driver. Exposure to market risk is on the lower side with sovereign debt securities comprising 97% of the total investments.
Net markup income was 20% lower YoY, which was mainly a result of contraction in spread. Profitability is expected to improve driven by forecasted volumetric growth in advances and investments and increase in interest rates. Accordingly, efficiency ratio (cost to income) is expected to remain strong. Capital Adequacy Ratio (CAR) is expected to remain comfortably above statutory requirement over the rating horizon. Liquidity profile remains strong in view of sizeable liquid assets in relation to total borrowings. Funding profile draws support from availability of long-term funding from World Bank (WB) and close matching of the duration and maturity of assets and liabilities.
For more information, contact:
Director Compliance and Rating Analytics,
VIS Credit Rating Company Limited
VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi, Pakistan
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: bilal@jcrvis.com.pk
Website: https://www.vis.com.pk/