The Pakistan Credit Rating Agency Limited
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Sanna Khan

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PACRA Assigns "Positive Outlook" to Entity Ratings of First Punjab Modaraba

Rating Type Entity
Action Maintain Maintain
Long Term BBB+ BBB+
Short Term A2 A2
Outlook Positive Stable
Rating Watch - -

The ratings of FPM reflect demonstrated commitment of key sponsor – The Bank of Punjab (BoP) – a bank majority owned by the Government of Punjab. Lately, the Modaraba has witnessed improvement in its standalone business profile exhibited its performance trend; achieving break-even is a key highlight. The Modaraba managed to expand its earning assets, mainly lending book wherein vehicle financing contributed majorly. The sponsor continued its support in the form of a sustainable funding base, which the management expects to increase to fund envisaged growth plans. Meanwhile, the management’s efforts resulted in a decline in delinquency ratio. Further recoveries, as planned, are likely to support Modaraba’s performance in the future. The management’s efforts in particular to build strong financing book are expected to yield sustainable results; however, materialization is contingent upon the timely implementation.
The positive outlook shows improving performance of the Modaraba. Sustainable improvement in operational performance, in turn, achieving bottom line profitability would be critical. Meanwhile, any weakening in the support from the sponsor could have negative implications.

About the Entity
First Punjab Modaraba (FPM), established in 1992, is a perpetual multi-purpose Modaraba listed on Pakistan Stock Exchange. The Modaraba caters to corporate, commercial, and individual customers through various modes of Islamic financing mainly ijarah, morabaha and musharaka. Punjab Modaraba Services (Pvt.) Limited (PMSL) - wholly owned subsidiary of The Bank of Punjab (BoP) holds ~39% stake in the Modaraba.
The Board of Directors (BoD) comprises six members including the CEO of FPM. The deputy CEO of BoP, Mr. Khalid Tirmizey, chairs the Board. Four board members hold executive positions in BoP, while there is one Independent director. Mr. Aamir Malik, the Chief Executive Officer of FPM, has over two decades of experience, mainly at The Bank of Punjab. He has handled banking affairs at different management positions. The management team carries adequate experience profile.

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 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.