Press Release

JCR-VIS Maintains Entity Ratings of Trust Modaraba

Karachi, January 26, 2018: JCR-VIS Credit Rating Company Limited (JCR-VIS) has maintained entity ratings of ‘BBB-/A-3’ (Triple B Minus/A-Three) assigned to Trust Modaraba (TM). Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on December 6, 2016.

Ratings assigned take into consideration the limited scale of operations of TM. In 2009, management control of the modaraba was transferred to Al-Zamin Modaraba Management (Private) Limited (AZMM) on account of TM’s deteriorating financial and operating performance in previous years.

Current ratings of TM take into account adequate liquidity and capitalization indicators of the modaraba. Nevertheless, it is constrained by weak asset quality indicators, though slightly improved in the outgoing year, and limited asset base. Financing portfolio of the company comprises various modes of financing including Ijarah, Murabahah, Musharakah, diversification projects and equity market operations. Financing base of the Modaraba declined in FY17 given that growth in the portfolio remained contingent on funding. The Modaraba plans to mobilize borrowings in order to grow its portfolio; developments in this regard are yet to materialize. Despite inherited infection in the financing portfolio, a single exposure does not exceed more than 10% of its equity base. Nonetheless, quality of the financing portfolio must be maintained in order to ensure sustainability and growth in earnings.

Infection levels of the Modaraba continue to remain on the higher side. Subsequent to management takeover, consistent efforts were made towards recovery of its infected portfolio. However, actual recoveries have remained lower than the projected levels on account of delay in legal proceedings. Recovery of projected NPLs and availability of fresh funding will remain key rating drivers.

For further information on this rating announcement, please contact the undersigned (Ext: 207) or Mr. Javed Callea (Ext: 201) at 92-21-35311861-70 or fax to 92-21-35311872-3.

Jamal Abbas Zaidi

Applicable Rating Criteria: Non-Bank Financial Companies (October 2017)

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 2018 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