PAIR Investment Company Limited

CREDIT RATING REPORT | Jun-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
20-Jun-25 AA A1+ Stable Maintain -
21-Jun-24 AA A1+ Stable Maintain -
23-Jun-23 AA A1+ Stable Maintain -
25-Jun-22 AA A1+ Stable Maintain -
25-Jun-21 AA A1+ Stable Maintain -
About the Entity

PAIR Investment Company Limited (PAIR) was incorporated in January 2007. The company is a joint venture between Pakistan and Iran, having equal ownership stake. The PAIR Board is composed of an equal number of directors from Iran and Pakistan—three from each country—although one Pakistani seat is currently vacant. Mr. Abbas Daneshvar, the Company’s MD/CEO oversees the Company’s operations.

Rating Rationale

The assigned ratings of PAIR Investment Company Limited (“PAIR” or “the Company”) reflect the strength derived from its ownership structure, being a joint venture (J.V.) between the Government of Pakistan and the Government of Iran. The primary mandate of Development Finance Institutions (DFIs) is to promote economic and social development by financing commercially viable projects that may not be fully served by traditional financial institutions. The Company's risk profile benefits from its conservative business philosophy, which avoids spread-based transactions and emphasizes core, sustainable profit streams. However, NIM during CY24 witnessed compression, primarily driven by the income reversal on a classified exposure to non-government debt securities. This results in net markup income of PKR 1,407mln in CY24 (CY23: PKR 1,701mln). In CY24, credit loss allowances and write-offs rose significantly to PKR 573.7 mln, an increase of PKR 402.8 mln year on year. This uptick was largely attributable to exposures in private debt securities of issuers with heightened sensitivity to macroeconomic headwinds, which necessitated the restructuring of their debt obligations. The Company’s lending book recorded moderate growth over the last five quarters, underpinned by prudent diversification across key sectors such as textile, sugar, telecommunications, rice, steel, energy, tyres, and financial services. The Company’s investment portfolio grew by 14.4% during CY24 to PKR 25,923mln, with momentum continuing into 1QCY25, reflecting a further increase. The Company's investment book is primarily composed of floating-rate Pakistan Investment Bonds (PIBs), a strategic choice aimed at mitigating interest rate risk and maintaining the portfolio's average duration at an optimal level. The management team is cohesive and well-integrated, with a demonstrated commitment to preserving asset quality. The ratings also incorporate the management’s focused efforts to prudently manage the relatively high concentration in the advances portfolio, which remains largely extended to financially sound counterparties. This is also supported by the gradual reduction in gross infection ratio over the years from 18.7% in CY23 to 15.8% in 1QCY25. The total asset base grew by 10.9% amounting to PKR 40.4bln during CY24 and PKR 45.5bln in 1QCY25. Asset growth has been largely attributed to the expansion of the investment book, necessitated by a cumulative policy rate cut of over 1,000 basis points. The increase in investments was essential to sustain core income levels amid the lower interest rate environment. The Company has maintained its CAR (Capital Adequacy ratio) ratio at 45.3% during CY24 indicating a solid buffer against potential credit and market shocks, thereby underscoring its strong risk absorption capacity. The liquidity position and capitalization indicators remain stable. Borrowings from financial institutions remain the primary source of funding, while contributions from Certificates of Investment (COIs) have also increased, further diversifying the funding base. In the DFI industry, limited growth in advances, over the last many years, is evidence of the conservative risk appetite of these institutions. CY24 was a challenging year for the DFI industry in terms of Net Interest Margin (NIM) generation. However, consequent to interest rate cuts by SBP, NIM started to improve from 4QCY24.

Key Rating Drivers

The ratings are dependent on the company’s ability to sustain its financial profile while managing the concentration level in funding and advances. Consistent efforts by the management to add new sectors/names to further diversify their portfolio, manage provisioning expense and effect on profitability, and strengthen of equity base remain critical for the ratings.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

PAIR Investment Company Limited

rating analysis

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Profile
Structure

PAIR Investment Company Limited (“PAIR” or “the Company”) was incorporated in January 2007 and commenced operations as a Development Finance Institution (DFI) on May 29, 2007. The company is a joint venture between the governments of Pakistan and Iran, having an equal ownership stake. The Ministry of Finance (MoF) manages the ownership interests of the Government of Pakistan, while the Iran Foreign Investment Company (IFIC) represents the Government of Iran.


Background

Iran Foreign Investment Company (IFIC), was incorporated in March 1998, and is entrusted with the objective of managing and expanding the Government of Iran’s holdings abroad. IFIC has ventures in different countries mainly concentrated in Europe followed by Asia, Africa, and South America, segregated investments among three principal sectors, naming financial institutions, industrial sector, and IT.


Operations

PAIR’s objectives include financing for industrial and commercial projects and SMEs, capital and money market operations, and other investment banking activities. PAIR has been following a prudent strategy in recent years with respect to advances and investment. Consequently, it has developed a diversified portfolio of advances, strategic, and equity investments.  The Company operates through its head office in Karachi and has a branch office in Lahore.


Ownership
Ownership Structure

PAIR is equally owned by the Government of Pakistan through Ministry of Finance, and the Government of Iran through Iran Foreign Investment Company, representing their respective governments.


Stability

The ownership structure has remained the same since the inception of the Company. It is likely to stay the same in the foreseeable future.


Business Acumen

The business acumen of sovereign sponsors is considered strong. IFIC demonstrates a calculated and diversified investment strategy, managing Iran’s foreign financial assets with a focus on long-term value creation, economic diplomacy, and portfolio diversification.


Financial Strength

The Government of Pakistan and the Government of Iran, as sovereign sponsors, demonstrate strong financial capacity and creditworthiness, enabling them to support long-term investments effectively.


Governance
Board Structure

PAIR’s board composition consists of an equal number of directors from both countries, three directors representing Iran and three directors representing Pakistan, whereas, one directorship representing Pakistan lies vacant. All the members of the board are non-executive except the MD/CEO of the Company.


Members’ Profile

All the board members carry experience from diversified sectors. The experience of the board assists in providing useful insight into investment management and guides in developing effective risk management policies and procedures. Mr. Zulfiqar Younas, serving as the acting Chairman,  serve as the Additional Secretary (Climate Finance) at the Ministry of Climate Change & Enviournmental Coordination and brings a wealth of experience in public finance and human resource management. His background includes a proven track record of success in the public sector, handling diverse responsibilities. With over 29 years of experience, Mr. Zulfiqar has been involved in a wide range of trade, public finance, diplomatic, and public sector roles. Mr. Abbas Daneshvar Hakimi Meibodi is the Managing Director/CEO of PAIR Investment Company Limited. He holds a Master’s degree in Economics. He has a long, diversified and successful track record in the banking sector. Mr. Aamer Mahmood Hussain holds a Master’s degree in Business Administration from Punjab University, Lahore. He has extensive experience spreading over 20 years in the financial sector worked in the Finance Division of the Ministry of Finance and Federal Board of Revenue, Government of Pakistan. He held various positions like Joint Secretary- Investment, Banking, Expenditure, Development and Financial Advisor to different Federal Ministries. He has also served as Deputy Commissioner of Income tax for more than 10 years. Dr. Mohammad Hossein Mohammadi holds a Ph.D. in International Relations and brings over 14 years of extensive management experience in international affairs, banking, and trade negotiations. His expertise spans international banking, investment and financing, human resources, development studies, media economics, and regional cooperation planning. He has also been actively engaged with international organizations, contributing to strategic initiatives and policy development. Dr. Seyed Mohammad Hadi Sobhanian, Director appointed by the Government of Iran, is a Ph.D. holder in economics and currently holds the position of President, Iranian National Tax Administration (INTA) & Deputy Minister of Economic Affairs & Finance.


Board Effectiveness

The board has formulated four board committees for effective monitoring namely Board Audit Committee, Board Risk Management Committee, Board Human Resource Committee, and Board Strategic Investment Committee. Four meetings of Board Audit Committee, four meetings of Board Risk Management Committee, two meetings of Board Human Resource Committee, and three meetings of Board Strategic Investment Committee were held during CY24. The presence of board committees has strengthened the governance profile of the Company.


Financial Transparency

M/s Yousuf Adil Chartered Accountants, who are in the category ‘A’ of SBP and have a QCR rating by ICAP, are the company’s external auditors. They have expressed an unqualified opinion in their audit report for the year ended December 31, 2024.


Management
Organizational Structure

The Company’s organizational structure illustrates a clear and structured governance framework, with the Board at the apex, supported by four key committees: Human Resource, Risk Management, Strategic Investment, and Audit. These committees enable focused oversight and effective decision-making. The MD/CEO reports directly to the Board and is responsible for overall management, supported by the Executive Secretary to the MD. The structure reflects a well-defined separation between governance and executive functions, promoting accountability, transparency, and operational efficiency.


Management Team

PAIR’s management team comprises well-qualified and experienced individuals, who have an association with the company for a long period.  Mr. Abbas Daneshvar Hakimi Meibodi, the Company’s Managing Director/CEO, holds a Master’s degree in Economics. He has a long, diversified and successful track record in the banking sector. He started his banking career in 2001. Where he held various senior positions and climbed the clear ladder step by step. He also attended international courses and skilled in Risk, Finance, AML/CFT, Treasury, International Banking and Compliance.  Mr. Khurram Faizyab, the Company’s head of Corporate & Investment Banking Group has over 26 years of diversified experience with a focus on managing corporate relationships. Prior to joining PAIR Investment Company, he was heading the Corporate Banking Department at Pak Oman Investment Company. Mrs. Kauser Safdar, the Company’s CFO  is a chartered accountant by profession and is a fellow member of Institute of Chartered Accountants of Pakistan. She additionally holds the qualification of Cost and Management accountant from Chartered Institute of Management Accountants – UK.  she brings with her more than 25 years of diverse financial management experience and expertise. Mr. Ahmed Bilal Darr, the Company’s head of Treasury and Investments is Masters in Business Administration with Majors in Finance from Quaid-e-Azam University, Islamabad. He has 31 years of working experience in Pakistan's financial sector, specifically in treasury and corporate finance. 


Effectiveness

The management is assisted by nine management committees: Asset and Liability Committee (ALCO), Risk Management Committee, Admin Committee, Compliance Management Committee, IT Steering Committee, HR Committee, Central Credit Committee, and Internal Control Monitoring Committee.


MIS

The head of departments monitors the performance through system-generated reports. These reports can be generated daily, weekly, monthly, or quarterly basis to evaluate the performance of the respective departments.


Risk Management Framework

PAIR has implemented a risk management framework outlining the various roles and responsibilities of each risk unit. Credit, market, liquidity, and operational risk policies have been implemented, in line with the requirements of SBP, to measure, monitor and mitigate all risk factors. PAIR’s Risk Management Department has four main functions, namely: Credit Risk, Market Risk, Liquidity Risk, and Operational Risk.


Business Risk
Industry Dynamics

CY24 was a challenging year for the DFI industry in terms of Net Interest Margin (NIM) generation. However, consequent to interest rate cuts by SBP, NIM started to improve from 4QCY24. This trend further strengthened in 1QCY25, primarily driven by prudent duration matching and effective market risk management, evidenced by the strategic reallocation of investment portfolios from fixed-rate to floating-rate PIBs and the non-rollover of maturing T-bills. As a result, repo borrowings were significantly reduced to PKR179bln in CY24 from PKR1.8trn in CY23. The DFI industry’s investment portfolio stood at PKR1.6trn, primarily comprising PKR1.1trn in federal government floating-rate PIBs, followed by PKR323bln in fixed-rate PIBs. During the period, the Central Bank maintained an expansionary monetary policy stance to stimulate economic growth and support aggregate demand.


Relative Position

The Company’s market share in terms of advances marginally inclined to 6.5% (CY23: 6%), reflecting their cautious approach amidst a stressed macroeconomic environment, in line with industry norms.


Revenues

During CY24, markup earned witnessed a marginal incline and stood at PKR 6,169mln (CY23: PKR 5,868mln) driven by the incline in markup earned from investments (CY24: PKR 4,739mln, CY23: PKR 4,436mln). Markup expensed witnessed a sizable incline to PKR 4,762mln (CY23: PKR 4,167mln) attributable to the inclined borrowing cost. Hence the markup income of PAIR witnessed a dip and stood at PKR 1,407mln (CY23: PKR 1,701mln). The Company’s asset yield witnessed a dip to 17.8% in CY24 (CY23: 19%). The cost of funds marginally inclined to 18% (CY23: 17.9%). During 1QCY25, markup earned stood at PKR 1,313mln (1QCY24: PKR 1,627mln), whereas the net markup income witnessed marginal improvement and clocked at PKR 429mln (1QCY24: PKR 411mln).


Performance

During CY24, non-markup income of PAIR stood at PKR 114mln (CY23: PKR 224mln). The decline is driven by decline in Company’s dividend income that stood at PKR 58mln (CY23: PKR 161mln). Net markup income to total income increased to 92.5% (CY23: 88.4%).  During CY24, PAIR recorded credit loss allowance of PKR 574mln during the period. Hence, the net profit of the Company stood at PKR 400mln (CY23: PKR 769mln). In 1QCY25, PAIR’s net profit clocked at PKR (1QCY24: PKR 330mln).


Sustainability

The management of the Company is committed to generating a green bottom line while adopting a cautious approach. By adhering to disciplined financial management policies, they anticipate maintaining minimal non-performing loans in the years ahead.


Financial Risk
Credit Risk

The Company has designed an Internal Rating Models and methodology to gauge credit risk elements in the banking book of the Company. The credit products mainly comprise of fund based and non- fund based, including short term finance, and long-term financing, project finance, term lending, reverse repurchase, bridge finance, investment in TFCs, sukuk bonds and placement with financial institutions etc. During 1QCY25 and CY24, the Company’s corporate book portfolio stood at 11,247mln and 10,700mln respectively. Asset quality remained adequate with gross infection ratio stood at 15.5% during CY24 (CY23: 18.7%) and NPLs at PKR 2,079mln. During 1QCY25, the gross infection ratio marginally inclined to 15.8%.


Market Risk

The Company’s asset base witnessed YoY growth of ~11% to PKR 40,437mln (CY23: PKR 36,442mln) mainly driven by the increase in the investment book size (CY24: PKR 25,923mln, CY23: PKR 22,651mln). Analysis of the investment book reveals that contribution by government securities sizably increased and stood at PKR 20,263mln during CY24 (CY23: PKR 15,931mln) which is 78% of the total investment book. During 1QCY25, the Company’s investment book continued the upward trajectory and stood at PKR 29,670mln.


Liquidity and Funding

During 1QCY25, the Company’s borrowing book grew sizably to PKR 28,253mln (CY24: PKR 23,799mln, CY23: PKR 21,789mln), mainly driven by a sizable incline in the repurchase agreement borrowings. The Company’s deposit base also witnessed increase to PKR 4,863mln (CY24: PKR 4,501mln, CY23: PKR 2,724mln).  The incline in deposits bodes well for the funding base. Going forward, this will assist in attaining a favourable cost structure for the funding base. The Liquidity Coverage Ratio of the Company stood at 137% (CY24: 148%).


Capitalization

A strong equity base (CY24: PKR 10,883mln; 1QCY25: PKR 10,708mln; CY23 PKR 10,581mln), comprising Tier-I capital provides comfort to absorb the impact of any adverse macroeconomic performance-related shocks. The Company’s capital adequacy stood at 45.3% during CY24 (1QCY25: 39.7%, CY23: 36.6%), remaining well above regulatory requirements. Materialization of growth plans may maximize capital utilization. The company’s equity to total asset ratio stood at 26.9% during CY24 (CY23: 29%).  The company’s equity comfortably exceeds the minimum capital requirement, reflecting a strong capital position.
 
 

Jun-25

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PAIR Investment Company Limited

financial summary

(PKR mln)

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Mar-25
3M		 Dec-24
12M		 Dec-23
12M		 Dec-22
12M
A. BALANCE SHEET
1. Stage I | Advances - net 10,686 10,090 9,754 9,272
2. Stage II | Advances - net 290 394 514 0
3. Stage III | Advances (NPLs) 2,079 1,950 2,406 2,048
4. Stage III | Impairment Provisions (1,809) (1,735) (2,023) (1,878)
5. Investments 29,670 25,923 22,651 21,085
6. Other Earning Assets 65 188 178 22
7. Non-Earning Assets 4,547 3,625 2,962 2,188
8. Non-Performing Finances-net 0 0 0 4
Total Assets 45,530 40,437 36,442 32,741
6. Deposits 4,863 4,501 2,724 1,772
7. Borrowings 28,253 23,799 21,789 20,336
8. Other Liabilities (Non-Interest Bearing) 1,706 1,253 1,347 860
Total Liabilities 34,822 29,553 25,861 22,968
Equity 10,708 10,883 10,581 9,773
B. INCOME STATEMENT
1. Mark Up Earned 1,313 6,169 5,868 3,244
2. Mark Up Expensed (883) (4,762) (4,168) (2,132)
3. Non Mark Up Income 23 114 224 110
Total Income 452 1,521 1,924 1,221
4. Non-Mark Up Expenses (221) (510) (647) (470)
5. Provisions/Write offs/Reversals (73) (574) (171) (97)
Pre-Tax Profit 158 437 1,106 654
6. Taxes (74) (37) (337) (208)
Profit After Tax 84 400 769 446
C. RATIO ANALYSIS
1. Cost Structure
Net Mark Up Income / Avg. Assets 4.0% 3.7% 4.9% 3.9%
Non-Mark Up Expenses / Total Income 49.0% 33.5% 33.6% 38.5%
ROE 3.1% 3.7% 7.6% 4.6%
2. Capital Adequacy
Equity / Total Assets (D+E+F) 23.5% 26.9% 29.0% 29.8%
Capital Adequacy Ratio 39.7% 45.3% 36.6% 33.5%
3. Funding & Liquidity
Liquid Assets / (Deposits + Borrowings Net of Repo) 89.8% 93.2% 93.9% 67.4%
(Stage I | Advances + Stage III | Advances - net (Non Performing Loans-net)) / Deposits 225.3% 229.0% 372.1% 532.9%
4. Credit Risk
Stage III | Advances (NPLs) / Gross Advances 15.8% 15.5% 18.7% 18.1%
Non-Performing Finances-net / Equity 2.5% 2.0% 3.6% 1.8%

Jun-25

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PAIR Investment Company Limited

rating scale

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Jun-25

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PAIR Investment Company Limited

regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
  2. Restrictions
    1. No director, officer, or employee of PACRA communicates the information acquired by him for use for rating purposes to any other person, except where required under law to do so. (Chapter III; 10-(5))
    2. PACRA does not disclose or discuss with outside parties or make improper use of the non-public information which has come to its knowledge during a business relationship with the customer. (Chapter III; 10-7-(d))
    3. PACRA does not make proposals or recommendations regarding the activities of rated entities that could impact a credit rating of the entity subject to rating. (Chapter III; 10-7-(k))
  3. Conduct of Business
    1. PACRA fulfills its obligations in a fair, efficient, transparent, and ethical manner and renders high standards of services in performing its functions and obligations. (Chapter III; 11-A-(a))
    2. PACRA uses due care in the preparation of this Rating Report. Our information has been obtained from sources we consider to be reliable, but its accuracy or completeness is not guaranteed. PACRA does not, in every instance, independently verify or validate information received in the rating process or in preparing this Rating Report. (Clause 11-(A)(p))
    3. PACRA prohibits its employees and analysts from soliciting money, gifts, or favors from anyone with whom PACRA conducts business. (Chapter III; 11-A-(q))
    4. PACRA ensures before the commencement of the rating process that an analyst or employee has not had a recent employment or other significant business or personal relationship with the rated entity that may cause or may be perceived as causing a conflict of interest. (Chapter III; 11-A-(r))
    5. PACRA maintains the principle of integrity in seeking rating business. (Chapter III; 11-A-(u))
    6. PACRA promptly investigates in the event of misconduct or a breach of the policies, procedures, and controls, and takes appropriate steps to rectify any weaknesses to prevent any recurrence, along with suitable punitive action against the responsible employee(s). (Chapter III; 11-B-(m))
  4. Independence & Conflict of Interest
    1. PACRA receives compensation from the entity being rated or any third party for the rating services it offers. The receipt of this compensation has no influence on PACRA’s opinions or other analytical processes. In all instances, PACRA is committed to preserving the objectivity, integrity, and independence of its ratings. Our relationship is governed by two distinct mandates: i) rating mandate - signed with the entity being rated or issuer of the debt instrument, and ii) fee mandate - signed with the payer, which can be different from the entity.
    2. PACRA does not provide consultancy/advisory services or other services to any of its customers or their associated companies and associated undertakings that are being rated or have been rated by it during the preceding three years, unless it has an adequate mechanism in place ensuring that the provision of such services does not lead to a conflict of interest situation with its rating activities. (Chapter III; 12-2-(d))
    3. PACRA discloses that no shareholder directly or indirectly holding 10% or more of the share capital of PACRA also holds directly or indirectly 10% or more of the share capital of the entity which is subject to rating or the entity which issued the instrument subject to rating by PACRA. (Chapter III; 12-2-(f))
    4. PACRA ensures that the rating assigned to an entity or instrument is not affected by the existence of a business relationship between PACRA and the entity or any other party, or the non-existence of such a relationship. (Chapter III; 12-2-(i))
    5. PACRA ensures that the analysts or any of their family members shall not buy, sell, or engage in any transaction in any security which falls in the analyst’s area of primary analytical responsibility. This clause, however, does not apply to investments in securities through collective investment schemes. (Chapter III; 12-2-(l))
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  5. Monitoring and Review
    1. PACRA monitors all the outstanding ratings continuously, and any potential change therein due to any event associated with the issuer, the security arrangement, the industry, etc., is disseminated to the market immediately and in an effective manner after appropriate consultation with the entity/issuer. (Chapter III; 17-(a))
    2. PACRA reviews all the outstanding ratings periodically on an annual basis. Provided that public dissemination of annual review and in an instance of change in rating will be made. (Chapter III; 17-(b))
    3. PACRA initiates an immediate review of the outstanding rating upon becoming aware of any information that may reasonably be expected to result in downgrading of the rating. (Chapter III; 17-(c))
    4. PACRA engages with the issuer and the debt securities trustee to remain updated on all information pertaining to the rating of the entity/instrument. (Chapter III; 17-(d))
  6. Probability of Default
    1. PACRA’s Rating Scale reflects the expectation of credit risk. The highest rating has the lowest relative likelihood of default (i.e., probability). PACRA’s transition studies capture the historical performance behavior of a specific rating notch. Transition behavior of the assigned rating can be obtained from PACRA’s Transition Study available at our website. (www.pacra.com) However, the actual transition of rating may not follow the pattern observed in the past. (Chapter III; 14-3(f)(vii))
  7. Proprietary Information
    1. All information contained herein is considered proprietary by PACRA. Hence, none of the information in this document can be copied or otherwise reproduced, stored, or disseminated in whole or in part in any form or by any means whatsoever by any person without PACRA’s prior written consent.

Jun-25

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