JCR-VIS Credit Rating Company Limited (JCR-VIS) upgrades the entity ratings of Khushhali Bank Limited (KBL) to 'A' (Single A) from 'A-' (Single A Minus) for the medium to long-term and A-1 (A One) from A-2 (A-Two) for the short-term. KBL is the largest microfinance bank in the country, mostly having presence in rural segments of the economy. The bank operates through a branch network of 109 branches spread across 76 districts nationwide.
The recent floods in Pakistan affected the microfinance sector in general and institutions active in the agricultural setup in particular. Given the portfolio concentration of KBL, a cross section of the bank's client was affected with 46 branches disturbed during the catastrophe.
Delinquencies in the loan portfolio appear to be within control so far. While the full impact of floods will be ascertained in coming months as the portfolio reaches maturity, extrapolating current trends do not point towards meaningfully adverse changes to asset quality indicators.
Repayment of the credit facility from Asian Development Bank (ADB) has commenced with redemption of Rs 360 million being made annually in two instalments. Given the need for alternate funding sources, the bank is making material efforts in this regard by converting its micro credit branches into full service banking branches.-PR
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