VIS Reaffirms Ratings of The First Microfinance Bank Limited - Press Release issued by VIS Credit Rating Company Limited.

Karachi -- March 27, 2019 (PPI-OT)

Following is the text of press release issued by VIS Credit Rating Company Limited

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VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings assigned to The First Microfinance Bank Limited (FMFB) at 'A+/A-1' (Single A Plus/A-One). The medium to long-term rating of 'A+' denotes good credit quality coupled with adequate protection factors. Moreover, risk factors may vary with possible changes in the economy. The short-term rating of 'A-1' denotes high certainty of timely payment, liquidity factors are excellent and supported by good fundamental protection factors. The previous rating action was announced on April 30, 2018. Outlook on the assigned rating is 'Stable'.

The assigned ratings take into account strong ownership profile as shareholding of the bank is vested with Habib Bank Limited, the largest commercial bank in Pakistan, Aga Khan Development Network and other international financial institutions. The ratings draw comfort from positive dynamics of microfinance sector and constructive regulatory environment.

The ratings also factor in sustained growth in microcredit portfolio, emanating from expanding geographic penetration and increasing average loan size. The bank's infection ratios have remained one of the lowest among peer microfinance banks, though registering a marginal increase on a timeline basis. Considering increasing trend in sector-wide non-performing loans, the bank may further streamline its risk management framework. Moreover, positive momentum in profitability, resulting from growing core income and rationalized operational cost structure, continues to support FMFB's internal capital generation.

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