The Pakistan Credit Rating Agency LimitedP RRESS ELEASE

PACRA Maintains Entity Ratings of Apna MicrofinanceBank Limited; Outlook remains PositiveThe Pakistan Credit Rating Agency (PACRA) has maintained thelong-term and short-term entity ratings of Apna Microfinance BankLimited (AMBL) at "BBB" (Triple B) and "A3" (A Three),respectively. Meanwhile the outlook for the ratings remain "Positive". Theseratings denote an adequate capacity for timely payment of financialcommitments.The ratings reflect the sponsors' concerted efforts to streamline the businessprofile of AMBL. Operational performance of the bank, though steadilyimproving, is yet to achieve sustainability. Although the bank is expanding itsloan book, the challenge is to achieve good quality - portfolio at risk higherthan sector norm. This is also restraining consistent profitability. While thebank has complied with capital requirements for provincial level license,sponsors are making efforts to pursue a national level license. Meanwhile,AMBL intends to expand its operations in interior Sindh; key focus would beto tap potential agricultural community. However, successful materialization ofits strategy, while improving bottom-line performance is yet to be seen.The ratings carry a positive outlook recognizing potential benefits fromincreasing capitalization level, enhancing market share in its operating marketand improvement in technological infrastructure. However, stability in keymanagement team, along with strengthening of risk management frameworkand related controls are critical.About the Bank: Apna Microfinance Bank Limited, listed on Karachi StockExchange, was established under the Microfinance Institution Ordinance 2001.It started operations in 2005.The bank, though currently concentrated inKarachi, has provincial licence - Sindh. The current group of sponsors,acquiring control in 2012, comprises business entrepreneurs and professionals.The seven member board is dominated by these shareholders. The Chairman ofthe board is also the main sponsor of the bank - Mian M.A. Shahid. He is thefounder of United International Group (UIG), which has interests in financialservices, tilted towards insurance sector. Mr. Saleem Shaikh, the bank'spresident, has around 35 years experience in the banking industry. He issupported by a team of qualified individuals.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honorits obligations. Our ratings reflect an independent, professional and impartial assessment of therisks associated with a particular instrument or an entity.PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financialstrength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion isnot a recommendation to purchase, sell or hold a security, in as much as it does not comment onthe security's market price or suitability for a particular investor.

Rating ActionLahore : 12-May-2014

AnalystHumza Hussain(+92-42-35869504)humza.hussain@pacra.comwww.pacra.com

Applicable Criteria andRelated Research

- Bank Rating Methodology

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