JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Pak Oman Microfinance Bank Limited (POM) at 'BBB3' (triple B plus / A-three). Outlook on assigned ratings is 'stable'. Ratings incorporate the strong sponsor support, as also evidenced by the Rs 251m injection in the last quarter of 2009, allowing the bank to meet minimum capital requirement (MCR) of Rs 500m.
While MCR for end December 2011 is higher at Rs 600 million+ADs- the equity of the bank is in excess of the regulatory requirement. Further benefit of capital injection was derived in terms of increase in revenue generation, facilitating the bank to post a fully profitable year in 2010 for the first time since inception.
Lending activities have yet to pick pace. Further reduction in gross lending portfolio translated into higher infection rate in the loan portfolio. However, these losses are not considered significant in relation to loss absorption capacity of the bank. Placements with an associated concern having high credit quality comprised more than 50 per cent of asset base. Sustainability of profitable operations in the long-term is dependent on the ability of the bank to vitalise core-banking operations. Strengthening in the control environment and capacity building of the institution are considered prerequisites in this regard.-PR
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