PACRA Upgrades Entity Ratings of JWS Pakistan
JWS Pakistan ('JWSP' or ‘the Institution') is a Microfinance Institution (MFI) governed by the Securities & Exchange Commission of Pakistan (SECP) under Section 42 of the Companies Act, 2017. The Institution is licensed to operate under NBFC (Establishment and Regulations) Rules, 2003, Non-Banking Finance Companies and Notified Entities Regulations 2008. It has been in operations since 2015. The key element is that MFIs are not permitted to mobilize deposits, while they are also not backed by any stakeholder equity due to their status of "Companies Limited by Guarantee". These two elements, in combination, provide funding constraints, while they also delimit the boundaries of risk. JWSP is a not-for-profit organization, hence, the source of funding comprises a) internal generation of profits, b) loans and c) grants. Over recent years, the Institution has sizably enhanced GLP which lead to improved markup earned. Net markup income also recorded improvement. Total income witnessed upsurge to PKR 469mln (6MFY21: PKR 307mln). Despite higher provisioning expense, net profitability improved manifolds. The Institution overcame the recent increase in non-performing loans due to expiration of SBP’s deferment scheme period, attributable to efficient field work which resulted in 100% cumulative recovery. Hereby, infection ratio remains one of the lowest in the industry. Sustained asset quality will remain an important factor in future. The Institution majorly relies on local avenues for borrowings, primarily PMIC. Funding base will be further strengthened attributable to expected influx of foreign funding; this will provide impetus to growth in upcoming years. Institution's cost of funds remained under control. Governance structure obtains strength from the body of members and board of directors. The ratings also incorporate the vulnerability in business due to low market share and limited geographical presence. Room for growth in the technological domain exists.
Ratings incorporate the Institution’s improved performance amidst economic slowdown lately exacerbated by the aftermaths of global pandemic spread. Furthermore, the Institution is adding more branches where cumulative number has surpassed 100. Fresh fundings have been injected recently by local and foreign lenders for further expansion. The ratings are dependent on the Institution's aptness to sustain positive performance indicators amidst growth in business volumes. Ratings will monitor expansion and the impact of technological progression on the operational and risk efficacy of the Institution.
JWS Pakistan was incorporated in 2015 as a Public Company Limited by Guarantee under Section 42 of the Companies Ordinance, 1984 (now the Companies Act, 2017). It is also licensed by the SECP under the Non-Banking Finance Companies Rules, 2003. The overall control of the Institution vests with a eight member Board of Directors. Ms. Sabiha Shaheen is the Chairperson of the Board. Mr. Qazi Shoaib Alam Farooqi is the CEO and founding member of the Institution, who brings with him a wealth of experience, of more than two decades in the industry. Other members of the management, possess adequate experience from diverse backgrounds.