Press Release

VIS Reaffirms Entity Ratings of Pak Oman Microfinance Bank Limited

Karachi, April 25, 2019: VIS Credit Rating Company Ltd. (VIS) has reaffirmed the entity ratings of Pak Oman Microfinance Bank Limited (POMFB) at ‘A-/A-2’ (Single A-Minus/A-Two). Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on April 27, 2018.

The assigned ratings incorporate POMFB’s strong sponsors profile while LOLC Private Limited (LOLC) being the parent continues to provide technical and managerial support to POMFB. Ratings also take into account the bank’s existing healthy liquidity and sound capitalization levels. Moreover, earning profile is projected to improve as the Bank continues to aggressively grow its loan book. Ratings are constrained by weakening in asset quality indicators on a timeline basis. Ratings remain dependent on improving asset quality indicators as levels of disbursement increase, requiring strengthening of IT infrastructure and internal controls as planned.

Net advances portfolio witnessed sizeable growth (higher than projected) and increased to Rs. 1,208.6m (2017: Rs. 688.1m) as at end-2018. Number of active clients increased by 68% in 2018. Growth in loan portfolio was a function of expansion in branch network, increase in loan officers and enhanced productivity indicators. Going forward, aggressive growth in loan book is projected to continue with management planning to further expand geographical footprint and roll out new products over the next 2 years. Asset quality was affected due to certain internal control issues which later have been addressed.

Liquidity profile is currently strong with sizeable liquid assets on balance sheet. Excess liquidity will be absorbed by the end of the ongoing year as POMFB forges ahead with its growth plans. Subsequently, a mix of deposits and borrowings is planned to be utilized for funding future growth. Capitalization indicators are projected to remain healthy over the rating horizon. Capital Adequacy Ratio was reported at 144% at end-Dec’2018 indicating room for significant growth.

For further information on this rating announcement, please contact the undersigned (Ext: 201) or Mr. Jamal Abbas Zaidi (Ext: 207) at 021-35311861-71 or fax to 021-35311872-3.

Javed Callea

Applicable Rating Criteria: Micro Finance Banks (June 2016)

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 2019 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

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