logo
The Pakistan Credit Rating Agency Limited
Press Release

Date
22-Mar-21

Analyst
Afnan Iqbal
afnan.iqbal@pacra.com
+92-42-35869504
www.pacra.com

Applicable Criteria

Related Research

Disclaimer
This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Stability Rating of NBP Islamic Savings Fund

Rating Type Stability Rating
Current
(22-Mar-21)
Previous
(23-Sep-20)
Action Maintain Upgrade
Long Term AA-(f) AA-(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

The fund aims to earn in a Shariah compliant manner by investing in Shariah compliant debt securities, money markets instruments, and bank deposits. The fund has mandate to invest primarily in Shariah compliant money market instruments and bank deposits. The fund will invest in money market instruments rated 'AA-' and above. The placement of funds in Riba free deposits with Islamic banks/Islamic window of conventional banks, other than TDR, will be in higher of the 'A' spectrum. The credit risk is expected to remain on the lower side. At the same time, the fund policy dictates higher allocation to liquid avenues. This enhances the liquidity profile of the fund. At end Dec'20, the fund had invested ~70% of funds with banks mostly rated 'AA-' and above. The fund also had an exposure of ~17% in Islamic commercial papers rated 'AA' and above. The unit holding pattern of the fund is diversified, top ten investors represent ~23% of the funds assets which reduces the redemption pressure. The performance benchmark of the fund is ‘6-months average deposit rates of three 'A' rated scheduled Islamic Banks or Islamic Windows of Conventional Banks.
Going forward, the fund intends to maintain its current asset allocation and the deposit with banks will be made in higher rated (mostly in AA category and occasionally higher spectrum of A). Material changes in the fund's asset allocation strategy, which could negatively impact the fund's credit quality and exposure to interest rate risk, remain critical for 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 163,473mln at end-Dec'20, the Company is currently managing a diversified fund slate of twenty eight open-end mutual funds, two voluntary pension schemes and an Exchange Traded Fund.

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.