PACRA Maintains Entity Ratings of Modaraba Al-Mali

The Rating of Modaraba is reflecting its equity based structure, backed by sponsor (Bank Islami) and Management Company. Its financing book mainly comprises of Ijarah and Musharaka. Previously Modaraba was engaged only in Ijarah, but now skewed towards Musharaka financing. Although the Asset quality is fully maintained, as non-additive NPL’s are fully provided (Loan Loss Provisions / Impaired Lending FY17: 100%; FY16: 100%). During FY17, Modaraba is able to increase its income from fuel business while controlling operating cost, which helped it registered a slight profits. Although decrease in fuel prices may impact Modaraba’s performance, the management would maintain largely equity based capital structure; however borrowing from the management company and sponsor bank would be available.

The ratings are dependent on the management's ability to focus more on its core business, adding more Musharakah financing and ensure consistent improvement in its performance. Maintaining healthy asset quality, while maintaining it’s current largely equity based capital structure is important to maintain the ratings at current level. Fluctuation in oil prices may impact the Modaraba’s income.

About the Entity
Modaraba Al-Mali (MAM), incorporated in 1987, is a small sized and perpetual multi-purpose Modaraba listed on Pakistan Stock Exchange, with its head office in Karachi. BankIslami Modaraba Investments Limited (BIML) – wholly owned subsidiary of BankIslami Pakistan Limited (BIPL) owns 13% equity of MAM, whereas others certificates are distributed among NBFCs, joint stock companies and individuals. BoD comprises eight members. Seven nominees are of BIPL and among them, there is one independent director. Mr. Aziz Adil- CEO of Modaraba Al Mali has two decades of diversified experience in the field of Islamic Finance. He is supported by a qualified management team.