The Pakistan Credit Rating Agency Limited
25-Sep-20
Analyst
Maryam Ijaz
maryam.ijaz@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
- Methodology | NBFC | Jun-20
- Methodology | Correlation Between Long-Term And Short-Term Rating Scale | Jun-20
- Criteria | Rating Modifier | Jun-20
Related Research
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PACRA Maintains Entity Ratings of First Habib Modaraba
| Rating Type | Entity | |
|
Current (25-Sep-20 ) |
Previous (26-Sep-19 ) |
|
| Action | Maintain | Maintain |
| Long Term | AA+ | AA+ |
| Short Term | A1+ | A1+ |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The ratings reflect First Habib Modaraba’s (FHM) strong business profile emanating from healthy asset base, sound asset quality and sustained profitability. The historical performance trend speaks volumes about the distinct position the FHM carries in the modaraba universe. Association with well-established sponsor i.e. Habib Metropolitan Bank, also provides comfort. The ratings takes into account good management quality and a strong control environment. The company witnessed profitability due to high interest rate regime while nurturing liquidity. FHM has managed to foster its devised strategy to beef-up its business volumes. This helped FHM to maintain its bottom-line performance by harnessing its asset quality, amidst COVID-19. FHM’s capital provides strong support to the funding structure of the Modaraba, equally aided by Certificates of Musharaka (CoM). The overall capital structure shows an inclination towards leveraging.
Going forward, the management, intends to expand its outreach amidst the rebound in economy post COVID-19 while utilizing synergies from the parent’s branch network.
The ratings are dependent on the management's ability to sustain its competitive positioning while ensuring stable profitability. The ratings also depend upon keeping its financial profile intact. Any significant change in its risk profile may adversely impact the ratings.
About
the Entity
First Habib Modaraba, established in 1985 and listed on Pakistan Stock Exchange, is a perpetual, multi-purpose Modaraba engaged in Islamic modes of financing, mainly Diminishing Musharaka and Lease financing. Habib Metropolitan Modaraba Management Company (Pvt.) Limited (HMMML) (wholly owned subsidiary of Habib Metropolitan Bank) is a management company of FHM. HMMML hold 10% stake in Modaraba. The Habib Metropolitan Modaraba Management Company (Pvt.) Limited (HMMML) also owns HabibMetro Modaraba.
The board consist of six members. All board members are non-executive except the CEO. All the board members have a vast experience of banking and finance. The CEO, Mr Muhammad Shoaib Ibrahim, Chairman of NBFI and Modaraba Association has been associated with the Modaraba since its inception. He is supported by experienced team members.