The Pakistan Credit Rating Agency Limited
19-Oct-22
Analyst
Madiha Sohail
madiha.sohail@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA Maintains Stability Rating of NBP Islamic Income Fund
| Rating Type | Stability Rating | |
|
Current (19-Oct-22 ) |
Previous (19-Apr-22 ) |
|
| Action | Maintain | Upgrade |
| Long Term | A+(f) | A+(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
NBP Islamic Income Fund (or the "Fund") is a medium risk-profile Fund. The assigned rating reflects the moderate strength of the Fund's credit and interest rate risk profile. The Fund had allocated ~71% of assets to bank placements mainly rated AAA, ~14% in TFC/Sukuks, ~6.5% in certificates of musharaka whereas ~4.5% in CPs. The duration of the Fund increased to 61days (Dec’21: 42 days), exposing low level of interest rate risk. The WAM of the Fund decreased to 73 days at the end Jun’22 (Dec’21:193 days) due to shifted investment from Sukuks and CPs to Banks, exposing the moderate level of credit risk. The unit holding pattern of the Fund was ~24% representing top ten investor concentration.
Going forward, the Fund intends to maintain its allocation in high rated banks. Material changes in the fund's asset allocation strategy, impacting its credit quality and/or exposure to interest rate risk, would affect the rating.
About
the Entity
NBP Fund Management Limited (or the "Company"), established in 2005, is licensed by Securities and Exchange Commission (SECP) to carry out asset management and investment advisory business. National Bank of Pakistan is the largest shareholder of the company with a stake of ~54%. In 2019, Baltoro Growth Fund has acquired the entire 36% stake of Alexandra Fund Management Private Limited in the Company. Baltoro Capital is a Pakistan focused private equity firm. Baltoro Capital has made investments in the pharmaceutical, renewable energy and financial services sectors in Pakistan. It is actively deploying its funds in businesses positioned to achieve extraordinary growth. The CEO of NBP Fund Management Limited, Dr. Amjad Waheed, CFA and family also holds a 10% stake in the company.
The Company’s nine-member Board of Directors includes three independent directors and the CEO. With overall assets under management of PKR 177,186mln at end-Jun'22, the Company is currently managing a diversified fund slate of twenty five open-end mutual funds, two voluntary pension schemes and one Exchange Traded Fund.