Press Release

JCR-VIS Reaffirms Entity Ratings of Kashf Foundation

Karachi, April 12, 2018: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed entity ratings of ‘BBB+/A-3’ (Triple B-Plus/A-Three) assigned to Kashf Foundation (KF). Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on October 31, 2017.
The ratings assigned to KF incorporate continuing equity enhancement through retention of healthy profits leading to improving risk profile. The company has reduced pricing of its product suite, thereby passing on the benefit to its customers. However, the company is expected to sustain profitability on the back of enhanced business volumes. While KF currently has sound asset quality indicators, maintenance of the same amid rapidly expanding credit portfolio remains critical to the ratings. The ratings also recognize company’s considerable experience in the fast growing microfinance sector along with its demonstrated ability to mobilize local and international funding.

Gross micro credit portfolio registered a 58% growth YoY, increasing to Rs. 7.2b (FY16: 4.6b) by end-FY17. During the period under review, two products were launched i.e. Kashf Maweshi Karza and Kashf Madadgar Karza, to further broaden the product base of the company. The management plans to increase both the number of clients and average loan size to achieve higher disbursement targets. Client retention ratio, albeit remained adequate, still has room for improvement.

To fund its ambitious business plans, KF has raised financing from both domestic and cross border avenues in FY17. The borrowing mix (domestic) is dominated by various term loan facilities from commercial banks, followed by revolving lines of credit by Pakistan Poverty Alleviation Fund. The company is also utilizing funds from Pakistan Microfinance Investment Company Limited. Foreign funding stood partly unhedged at end-FY17; according to the management, the said portion of borrowings was under regulatory approval and was hedged shortly afterwards; no foreign borrowings are left unhedged as per the company internal policy. Liquid assets represented around one-fourth of total borrowings at end-FY17. Debt to equity remained well within the internal benchmark of KF.

The institution continues to benefit from the diverse experience of its Board members. A seasoned management team of KF exhibits stability which is pivotal for effective implementation of business plan.

For further information on this rating announcement, please contact the undersigned at 021-35311861-70 or Mr. Maimoon Rasheed at 042-35723411-13.

Javed Callea

Applicable rating criterion: Micro Finance Institutions

Information herein was obtained from sources believed to be accurate and reliable; however, JCR-VIS Credit Rating Company Limited JCR-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.JCR-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.JCR-VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings.JCR-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 JCR-VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to JCR-VIS.

JCR-VIS Credit Rating Company Limited