Karachi, NRSP Microfinance Bank Limited has received an upgrade in its medium to long-term entity ratings from 'BBB+' to 'A-' by VIS Credit Rating Company Limited, reflecting improved credit quality and financial stability. The short-term rating remains stable at 'A-2'. This rating upgrade signals the bank's enhanced capacity to meet financial commitments, supported by effective management practices and strategic lending.

According to VIS Credit Rating Company Limited, the upgrade is anchored by NRSP Microfinance Bank's strong performance in reducing non-performing loans (NPLs) and shifting towards secured lending practices. These measures have significantly bolstered the bank's asset quality, particularly in the context of its gold and housing loan segments. The bank was established in 2008 and operates under a license from the State Bank of Pakistan, offering both conventional and Islamic microfinance services primarily targeted at the low-income, rural sector for poverty alleviation.

The ratings reflect sustained support from the bank's sponsors, including technical and financial assistance, which has been critical in navigating economic challenges and maintaining service delivery in rural areas. The bank's profitability has shown marked improvement due to an increase in net markup income and operational self-sufficiency, reflecting robust revenue generation strategies.

Despite these positive developments, VIS notes that NRSP Microfinance Bank must address a significant capital shortfall to meet regulatory requirements and support future growth. The bank's management has been proactive in implementing a consolidation strategy to manage risks and improve financial health.

Overall, the bank's liquidity metrics indicate a resilient funding base, with an increase in liquid assets and diversification of deposit sources, enhancing its financial stability. The outlook for the bank remains stable, contingent on continued prudent management and effective execution of strategic initiatives aimed at recapitalization and portfolio quality improvement.