The Pakistan Credit Rating Agency Limited
Press Release
a

Rating Action
Lahore: (07-September-2005)
    PACRA Maintains Ratings of House Building Finance Corporation (HBFC)
 

 
Analyst
Moin Khalid
(+92-42-586 9504)
moin@pacra.com

 

 

 









 

 





 

 

 

 

 

 

Disclaimer
This press release is transmitted to you for this sole purpose of dissemination through your newspaper/magazine/agency. The press release may be used by you in full or in part without changing the meaning or context thereof but with due credit to PACRA. However, PACRA has the sole right of distribution of its press releases for consideration or otherwise through any media.

  

The Pakistan Credit Rating Agency (PACRA) has maintained the long-term rating at ‘A’ (Single A)and the short-term rating at ‘A1’ (A One) of House Building Finance Corporation (HBFC). These ratings denote a low expectation of credit risk emanating from a strong capacity for timely payment of financial commitments.

HBFC’s ratings reflect the Corporation’s sound equity base signifying high-risk absorption capacity and strong underlying security against loans. Despite substantial proportion of overdue rentals, affecting performance from core financing operations, the cashflows remain strong to service financial commitments on timely basis owing to the distinctive funding arrangements with SBP. While these funds are being repaid gradually, the ongoing concerted efforts by the management for restructuring of the organization are expected to bring the requisite level of efficiencies and improvement in the Corporation’s operations, by the time it has to rely on borrowings from the open market at competitive rates. A multidimensional reforms program is in various stages of implementation to make HBFC an efficient and proactive organization compatible with the increasingly competitive environment in the financial sector.

About the Corporation: The House Building Finance Corporation (HBFC) was established in 1952 under the HBFC Act, to provide financial facilities for the construction, re-construction, repair and purchase of houses, particularly to the low and middle-income groups of the economy. The Government of Pakistan (GOP) and the State Bank of Pakistan (SBP) jointly hold the share capital of the Corporation.

The general direction and administration of the Corporation and its affairs is vested in the Board of Directors appointed by the GOP. HBFC has a large network of 60 offices spanning across the country, managed through 12 zones with headquarters at Karachi. The Corporation employs more than 1300 personnel.

Unlike other financial institutions engaged in housing finance, the bulk of the loan disbursements of HBFC are to low income group, and for construction of house, as against outright purchase and renovation. Under its new mission, the HBFC aims to be the housing bank for Small & Medium Housing (SMH) finance.

 
 
The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity.

PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings.

PACRA's opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.

 

    
rashida jones