The Pakistan Credit Rating Agency Limited
Press Release


Muhammad Nadeem Sheikh

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PACRA Assigns Initial Entity Ratings to Sindh Microfinance Bank Limited

Rating Type Entity
Action Initial
Long Term A-
Short Term A2
Outlook Stable
Rating Watch -

The ratings capture strength of the bank as a growing institution in the Microfinance sector. Loan book is gradually building up. The bank's business model incorporates appropriate controls to keep its risk profile sound. Asset infection ratio of the bank is currently NIL, but complying with the requirements of prudential regulations, the bank has recorded a general provision of 1%. Current design of the lending portfolio represents concentration in the flagship product "Sujag Aurat" (Visionary Women), focused on women entrepreneurship and financial inclusion. Livestock loan is the next product in line. Funding is currently being fueled through internal capital and sponsor support in the form of borrowings. The bank's focal strategy is pivoted around Sindh with plans to go national. Going forward, the bank eyes on raising funds from various channels to expand its business volume. The bank's financial profile attracts comfort from its association with the Government of Sindh. Investments in non-earning assets is low. Liquidity profile is reflected by saving deposits and TDRs placed with financial institutions.

The ratings are dependent on the bank's ability to sustain its growth trend in the MFBs market. Seamless governance practices are important. The ratings would also take into consideration funding strategies adopted by the management to fuel growth in the lending portfolio. Meanwhile, maintenance of asset health is of significance.

About the Entity
Sindh Microfinance Bank was incorporated with the Securities and Exchange Commission of Pakistan (SECP) in 2015 and commenced operations in May, 2016. The bank is a wholly owned subsidiary of Sindh Bank operating in the province of Sindh with a network of 13 branches and 47 micro-credit centers. The head office of the bank is located in Karachi.

Board of Directors comprises seven members;two members are representative of the Sindh Bank. Mr. Shams-ud-din Khan is the Chairman of the Board. He was formerly associated with Pak-kuwait Investment Company (PKIC) and has an overall experience of over ~40 years. Mr. Shoaib Arif, the CEO, is a microfinance industry veteran having an overall experience of more than ~20 years. He is accompanied by a team of professionals.

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.