Press Release

JCR-VIS reaffirms the Entity Ratings of The First MicroFinanceBank Limited at A+/A-1

Karachi, April 28, 2011: JCR-VIS Credit Rating Company Limited has reaffirmed the entity rating of The First MicroFinanceBank Limited (FMFB) at ‘A+/A-1’ (Single A Plus/A-One) with a ‘Stable’ Outlook.

The ratings take into account the strong sponsor support of the Aga Khan Development Network (AKDN) and its associated concerns, as also evidenced by a capital injection of Rs. 330m during the last quarter of FY10. Capital adequacy indicators of the bank have remained sound and leave room for growth as projected.

In addition to the economic and political turmoil faced by the microfinance banking sector, the devastating floods that hit most parts of the country during 3QFY10 had an adverse impact on credit growth vis-à-vis expectations on an industry wide basis. The situation was further exacerbated by announcement of the loan waiver by the Government of Pakistan as part of the Malakand Relief Package, which led to increased loan losses. Combined with general provisions taken against flood hit borrowers, FMFB took Rs. 224m in provisions, translating into a loss before tax of Rs. 157m. Subsequently, an equity injection and relief from SBP against claim for loan write-offs in the Chitral/Malakand District, has substantially reinstated and reinforced the financial position of the bank.

There has been growth in FMFB’s deposit base over the last few years. While depositor concentration has improved on a timeline basis, deposit access needs to be further developed. Liquidity remains adequate in relation to deposit base.

Change has also been noted in certain key management positions including at the helm of the institution and efforts have been made to improve lending controls framework further. Achieving financially sustainable growth will be a key area of focus in future rating reviews.

For further information on this rating announcement, please contact Ms. Sabeen Saleem, CFA (Ext: 501) or Ms. Erum Azhar (Ext: 505) at 35311861-72 or fax to 35311873.

Syed Ziauddin Ahmed

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited VIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2011 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.

JCR-VIS Credit Rating Company Limited