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The Pakistan Credit Rating Agency Limited
Press Release

Date
28-Mar-24

Analyst
Sohail Ahmed Qureshi
sohail.ahmed@pacra.com
+92-42-35869504
www.pacra.com

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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 Entity Ratings of JWS Pakistan

Rating Type Entity
Current
(28-Mar-24 )
Previous
(28-Mar-23 )
Action Maintain Maintain
Long Term BBB BBB
Short Term A3 A3
Outlook Stable Stable
Rating Watch - -

JWS Pakistan ('JWSP' or ‘the Company') is a Non- Banking Microfinance Company governed by the Securities & Exchange Commission of Pakistan (SECP) under Section 42 of the Companies Act,2017 with the status of “Company limited by guarantee”.
Operating since 2015, in the Upper and Central regions of Pakistan’s largest province, the company has steadily expanded its foothold in 22 districts of Punjab with 110 branches. As a not-for-profit organization, the company’s prime focus is community development, particularly women empowerment through the provision of microloans to budding women entrepreneurs who comprise 99% of their borrower base, thus enabling them to develop and expand small businesses. The company offers 8 loan products in the Enterprise, Agriculture, Livestock, SME, and Personal loan segments. With an active borrower base of ~175,892 as of Dec-2023, the company’s loan portfolio is predominantly concentrated in the enterprise segment. Over the years, the company has sizably enhanced its Gross Loan Portfolio (GLP) which has reached PKR 5,920mln as of Dec-23 (PKR 4,393, FY22). Resultantly, the markup earned by the company also increased to PKR 2,138mln in FY23 (PKR 1,381, FY22) and trickled down to profit after tax of PKR 281mln in FY23 (PKR 126mln, FY22). Prudent receivables management and efficient recovery have led to an infection ratio of ~1% which is substantially better than the industry average of ~3.8%. Sustained asset quality will remain an important factor in the future. Further, Room for growth in the technological domain exists. The company relies on diverse sources of funding, predominantly, the PMIC. It has also strengthened its funding base during the last year by garnering funds from international sources which shall fuel growth in the future. Going forward, the industry’s loan portfolio requires prudent management owing to enhanced gross lending rates on the back of elevated policy rate which might impact the financial risk profile particularly the Non-Performing Loans (NPLs). Further, the restriction on the mobilization of deposits modulates the risk absorption capacity supplementing the funding constraints. Despite the macroeconomic challenges including hyperinflation and a surge in interest rates the Portfolio at Risk of the sector (PAR) > 30 days has shown an improvement and reduced to 3.8% in 1HFY24 (6%, FY23).
The ratings are dependent on the Institution's ability to sustain positive performance indicators amidst growth in business volumes. Further, ratings also incorporate vulnerability of the business due to limited geographical presence and low market share. The ratings will monitor expansion of the business and efficacy of its risk mitigation mechanism.

About the Entity
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 an 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.

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.