PACRA Assigns Initial Entity Ratings to Sindh Microfinance Bank Ltd

October 19, 2018 (MLN): Pakistan Credit Rating Agency (PACRA) has assigned initial entity ratings to Sindh Microfinance Bank Limited, at ‘A-‘, for long term and ‘A2’ for short term, with a ‘stable’ outlook forecast.

As per an official announcement by the agency, these ratings capture the strength of the bank as a growing institution in the Microfinance sector.

It stated that, the bank's business model incorporates appropriate controls to keep its risk profile sound. “Asset infection ratio of the bank is currently NIL, but complying with the requirements of prudential regulations, the bank has recorded a general provision of 1%.”

According to the statement, the current design of the lending portfolio represents concentration in the flagship product "Sujag Aurat" (Visionary Women), which is focused on women entrepreneurship and financial inclusion.

Apart from that, funding is currently being fueled through internal capital and sponsor support in the form of borrowings, apprised the agency.

They further added that, the bank's financial profile attracts comfort from its association with the Government of Sindh while liquidity profile is reflected by saving deposits and TDRs placed with financial institutions.

“The ratings are dependent on the bank's ability to sustain its growth trend in the MFBs market. Seamless governance practices are important. The ratings would also take into consideration funding strategies adopted by the management to fuel growth in the lending portfolio. Meanwhile, maintenance of asset health is of significance,” remarked PACRA.

Sindh Microfinance Bank was incorporated with the Securities and Exchange Commission of Pakistan (SECP) in 2015 and commenced operations in May, 2016.

The bank is a wholly owned subsidiary of Sindh Bank operating in the province of Sindh with a network of 13 branches and 47 micro-credit centers. The head office of the bank is located in Karachi.

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